A letter of credit is used when the exporter needs greater assurance that the importer is going to pay for the goods or services received.

Question

Quizplus · Accepted Answer

This statement is true. A letter of credit is a financial tool used as a guarantee that the exporter will be paid for their goods or services when exporting to a foreign market. It provides greater assurance to the exporter by guaranteeing payment, as long as the exporter meets the terms and conditions set out in the letter of credit. A letter of credit is a financing tool used to guarantee payment to the exporter by the importer's bank, providing assurance to the exporter that they will be paid for the goods or services they provide.

A Letter of Credit Is Used When the Exporter Needs