Letter of Credit is also known as non fund based working capital financing. Letter of credit and bank guarantee has a very thin line of difference. Bank guarantee is revoked and bank makes payment to the holder in case of nonperformance of the opposite party whereas in case of letter of credit, the bank will pay the opposite party as soon as the party performs as per agreed terms. So, a buyer would buy a letter of credit and send it to the seller. Once the seller sends the goods as per agreement, the bank would pay the seller and collects that money from buyer. Letters of Credit are common in International trade because the bank acts as an uninterested party between buyer and seller. For example, importers and exporters might use letters of credit to protect themselves. Communication can be difficult across thousands of miles and different time zones. A letter of credit defines the details so that everybody is on the same page and clear. We can arrange a Letter of Credit to meet company's business needs.