Term Letter of Credit

A Term Letter of Credit is a financial document payable at a specified future date. It ensures payment obligations fall within the agreed timeframe.

Banks issue these term letters. Transactions typically include trade deals with deferred payment terms. Merchants, exporters, and importers, for example, use term letters of credit to ensure smooth commercial operations.

Such credits aid in international commerce. They minimize payment risk by securing payments for goods, while also accommodating buyers’ need for payment flexibility.