Letter Of Credit

There are many kinds of letters and each letter is written or issued with a specific purpose

. Similarly, there is a specific format and guidelines for writing these letters too. The requirement of the letter decides for the content and details of writing and issuing the letter. For example, the following enumerates situations which require a credit letter along with some tips for writing the same. Also, please note that there are different kinds of letters of credit. Some are given in the following:

Back-to-Back Letter of Credit

Deferred Payment Letter of Credit

Standby Letters of Credit

Sight Letter of Credit

Confirmed Letter of Credit

Revocable Letter of Credit

Tips for Writing Credit Letters

When you have applied for a loan, the bank from which you expect the same will ask for a credit letter. This letter will or should be issued to you by some financial organization that is ready to take the guarantee for repaying the amount you borrow

The letter should be detailed in nature, which includes all the terms and conditions in case of failure of fulfilling the decided transaction

Along with being detailed, the letter should be brief. Unnecessarily long sentences should be avoided and the rules should be laid down in either bulleted points or in short paragraphs with proper subheadings

It is necessary to be firm and use words that convey the same. Hence, it is important to provide the repercussions in case of non compliance

It is extremely important to have a copy of the letter you issue with you or ask the issuer to keep a duplicate copy of the letter with the issuing authority

Avoid any kind of formatting in the content of the letter. For example, when you wish to stress at some point, just give a subhead instead of putting it in bold

At all times, do keep in mind to be open and not state any statement which hints at a tone of termination; you will end up losing customers

These were some points to help in credit letter writing. Although we have compiled the basics of getting the letter right, it is important to refer to some actual letters. You could check with the organization and request them to make any changes if you think so. Also, confirm once from the organization to whom you have to submit the same whether they want anything to be mentioned in specific.

by: jenny

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