A documentary credit is issued to importer to pay exporter for an amount of GBP 40,000 payable with drafts drawn at 30 days from the date of shipment.Document is presented with bills of lading.This is an example of:

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This is an example of a letter of credit. A documentary credit is another term for a letter of credit, which is an agreement between the importer's bank and the exporter's bank that guarantees payment to the exporter once certain documents (such as bills of lading) are presented. In this case, the importer has agreed to pay the exporter GBP 40,000, and the payment will be made through drafts drawn at 30 days from the date of shipment.

A Documentary Credit Is Issued to Importer to Pay Exporter