The Buyer should:

• present in the bank filled in application form for issuance of letter of credit and come into agreement with the bank regarding a cash collateral under the letter of credit;
• stipulate in the application form all the terms and conditions necessary to utilize successfully the letter of credit, paying attention to the documents that clearly evidence the fulfillment of the Seller's contractual obligations.

Besides we recommend the Buyer to provide the Seller with a draft of letter of credit prepared with assistance of bank's specialist for final agreement on the terms and conditions in order to avoid mistakes and as a result additional expenses for amendments to letter of credit.

2. What should the seller do in order to use letter of credit as a payment instrument?

The seller should:

• come into agreement with the buyer on the terms and conditions of letter of credit;
• require the letter of credit to be confirmed by the 3d bank or by the seller's bank in the event of doubts regarding a reliability of the buyer's bank, meanwhile keeping in mind that charges for confirmation are quite high;
• after receipt of notification of issue a letter of credit - carefully check the content of letter of credit, and in the event when any condition does not comply  with the contract or that is impossible to fulfill any terms, - immediately request the Buyer to have the letter of  credit amended;
• deliver the goods only after having certified that the letter's of credit terms are acceptable.

When preparing shipping documents we recommend the Seller to contact a bank's specialists for assistance in this respect in order the documents to be in strict compliance with the terms and conditions of the letter of credit and international rules.

3. Is that possible to use letter of credit as a loan security instrument?

Letter of credit can not act as 100% loan security, but it may be considered as an additional advantage when making a decision on the loan granting.

4. When is it advisable to use a transferable letter of credit?

• if goods are delivered directly from the supplier (producer) to the final buyer;
• if contracts of the intermediary with the supplier and the final buyer are identical, meanwhile contract amounts, unit prices, dates and insurance percentage (if CIF or CIP delivery terms are applied) may be changed;
• transfer of letter of credit is possible if it is expressly marked as "transferable".