Letter of credit (L/C)
- A bank undertaking to pay the seller once compliant documents are presented.
- Commonly issued under the ICC rules UCP 600.
- Protects both sides: the seller is paid on compliant documents, the buyer pays only against them.
Payment upfront
Simple and fast, often used for samples, trial orders or smaller shipments. Combine it with clear specifications, samples and, if needed, inspection.
Good practice
- Agree specification, Incoterms and documents in writing.
- Make sure L/C document requirements match what can actually be produced.
- Use inspection where the value or risk justifies it.