Letters of Credit
International trade is becoming more commonplace than most would think. Small business startups that are looking for cost reductions in labor are now able to outsource fairly easily using nothing more than the internet and a PayPal account.
In some dealings with international businesses or workers, the topic of letters of credit may have come up. This will be especially true in dealing with large amounts of products for import or export.
A letter of credit is where a bank vouches for you or your company. That’s pretty much it. You have to prove to the bank that you can pay by either opening a line of credit that can cover the amount or by actually depositing the amount described in the letter of credit. By using a letter of credit, business can act faster in making deals because there is an assurance that the requester will be paid.