Because some of their cash must be frozen at the issuing bank to guarantee payment,importers often prefer terms other than those of a letter of credit.

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This is true, as a letter of credit requires a certain amount of cash to be frozen at the issuing bank as collateral, which can be inconvenient and tie up the importer's funds. Therefore, they may prefer other payment terms that are less restrictive.

Because Some of Their Cash Must Be Frozen at the Issuing