Beginner's Guide to Exporting. 4th Edition.

1 7 Beginner’s Guide To Exporting CHAPTER 5 SOURCING FOR EXPORT FINANCING 5.1 PAYMENT INSTRUMENTS All these payment instruments are applicable for both conventional financing or islamic trade financing. 5.1.1 Letter of Credit (L/C) • A very common form of payment practiced in trade financing is called Letter of Credit • It is a a written undertaking by a bank (issuing bank) to pay a seller (beneficiary) against the stipulated documents provided that the terms and conditions of the credit have been complied with (refer to illustration below).