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LETTERS OF CREDIT IN INTERNATIONAL TRADE

LETTERS OF CREDIT IN INTERNATIONAL TRADE. BY: PAULLO HIGIRO Email: prhigiro@yahoo.com. OBJECTIVES. After the presentation, the learners should be able to define and explain letters of credit and how they are used to mitigate Financial risks in international trade. Definition.

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LETTERS OF CREDIT IN INTERNATIONAL TRADE

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  1. LETTERS OF CREDIT IN INTERNATIONAL TRADE BY: PAULLO HIGIRO Email: prhigiro@yahoo.com

  2. OBJECTIVES • After the presentation, the learners should be able to define and explain letters of credit and how they are used to mitigate Financial risks in international trade.

  3. Definition • A letter of credit is a means or a guarantee at the buyer’s request to his bank that authorizes the seller to draw payment by a specified date for a particular shipment subject to fulfilment of the sale agreement and delivery of shipping documents

  4. RELEVANCE OF LETTERS OF CREDIT

  5. PARTIES TO THE LETTERS OF CREDIT • Buyer • Issuing Bank (buyer’s bank) • Advising Bank (seller’s bank) • Seller

  6. TYPES OF LETTERS OF CREDIT • Revocable • Irrevocable • Confirmed • Unconfirmed • transferable

  7. RISKS MITIGATED • The seller receives the right payment at the right time • The buyer receives his goods in right quantities, right quality and at the right time • It can be used as a Financing tool

  8. ASSESSMENT • Please receive the question paper and follow the instructions • INSTRUCTIONS • Tick the correct answer THANK YOU

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