A documentary credit reduces the uncertainty of a transaction by

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A documentary credit, also known as a letter of credit, clearly establishes the acts that the exporter must carry out in order to receive payment. This reduces uncertainty for both the exporter and importer, as the exporter knows what they need to do to receive payment and the importer has a guarantee that payment will only be made once the exporter has fulfilled the necessary requirements. Documentary credits do not provide guarantees of payment by the importer, insurance in case of loss or damage, or extended repayment terms.

A Documentary Credit Reduces the Uncertainty of a Transaction by