TRADE IN U.S.

Export Import Bank of the United States

The advantages and disadvantages associated with using each of the following:

A Letter Of Credit

Advantages

The documentary credit transactions secure international trade. It provides the security of a bank guarantee in a context where the actors, their practices and credit risk factors are not easily grasped by a player outside the country. The documentary credit transaction formalizes the agreement by writing in a standardized form. It encourages the international trade of goods (Carneym, Timothy, 2011, pp. 15).

Disadvantages

The credit is a liability to pay upon presentation of documents. It does not constitute a commitment on the ...