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What is it?
It is a financial instrument usually used in international trade operations. It consists of a document issued by a bank of the country of the buyer that guarantees to a bank of the seller's country that, if the seller fulfills the conditions of the purchase contract, it will guarantee the payment of the operation.







Advantages and disadvantages
- For the buyer, the financial organization can refinance the operation
- For the seller, in case the payment is deferred, it can finance it with the guarantee of collection
- It reduces the risks, both for the seller, who ensures collection, and for the buyer, who is covered for the possible unreliability of the seller
- Acts eliminating the problems derived from the different legislations between the countries of the buyer and seller


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