Letter of credit cost calculator
Add up what a letter of credit costs for an international order: the bank's issuing fee, any confirmation fee and fixed charges, and see the total as a share of the order. Free, no sign-up, nothing leaves your browser.
- 1Type in your own numbers
- 2The tool works it out
- 3See the answer clearly
Banks price letters of credit differently, so the starting fees are only an example; use the figures from your bank's tariff. Fixed charges cover things like document checking, amendments and courier costs. Part of a three-month period is counted as a whole one.
How a letter of credit works
A letter of credit is a promise from a bank to pay a seller on behalf of a buyer, as long as the seller shows the right documents. The buyer asks their bank to issue it, the seller ships the goods and gathers the documents it asks for, such as the bill of lading and invoice, and the banks check they match the terms exactly before paying.
The downsides
Banks charge fees to issue and check letters of credit, and small mistakes in the documents can delay payment. For smaller or repeat orders, many businesses use simpler options such as a deposit plus a bank transfer on delivery.
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SendPay doesn't issue letters of credit. SendPay platforms let businesses hold GBP, EUR and USD, send money and invoice customers under their own brand, powered by licensed partners.