Letters of Credit Impact on Small and Medium Enterprises: Small or Medium Enterprises (SMEs) account for 99% of businesses in the UK. There were over 5.7 million SMEs active in 2018. Letters of Credit can help alleviate some of the cash flow constraints stemming from delayed and long payment terms from end customers. Large international companies are often culprits for late payments to SMEs, which can often put small companies at financial strain, or even out of business. What are the Benefits of Using a LC? Risk and trust are one of the major challenges when it comes to trade, be that domestic or international. The specificity and legal weight of Letters of Credit are a big advantage, given that they are accepted and acknowledged by 175 countries, reduce the risk of doing business overseas, and provide transparent collaboration between unknown parties. Finally, Letters of Credit provide better clarity on the transaction, as all of the goods or services supplied would be defined in det...
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