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L/C Guarantee

​With an L/C (letter of credit) Guarantee from EKF, you will be able to arrange for your bank to participate in payments by letter of credit in countries and in markets where it would otherwise be unwilling to accept the risk. The L/C Guarantee indemnifies your bank against the risk of loss when the credit period is up to 24 months.

  • Advantages of L/C Guarantee

    An L/C Guarantee is the safest method of payment in the world
    You have the best security – a confirmed letter of credit – that a buyer abroad is able and willing to pay.

    Immediate payment
    Your payment is already guaranteed by your customer’s bank before the delivery of the goods. Therefore, you will receive payment shortly after the customer receives the goods, which strengthens your cash flow. At the same time, you will have the security of knowing that you will be paid on time and that the order cannot be cancelled or changed without your acceptance.
    EKF pays compensation for loss
    Your bank bears the risk associated with the letter of credit. An L/C Guarantee from EKF ensures that EKF will pay compensation to your bank if your bank is not paid by the bank abroad.
     
    No reason to be nervous
    An L/C Guarantee allows you to accept orders from markets that you would otherwise be unwilling to venture into. You assume no risk.
  • What is L/C Guarantee?

    A letter of credit is a payment guarantee provided by your customer’s bank and is considered to be one of the safest methods of payment in international markets.
     
    Letters of credit are a widely used method of payment in international trade, as the rules on letters of credit are recognised by banks worldwide.
     
    When you export goods and services using letters of credit as a method of payment, your customer’s bank undertakes to pay your bank, which will pay you.
     
    This entails that your bank bears the risk that the foreign bank will default on payment.
    Therefore, banks are not always willing to participate in letter of credit transactions. If your bank is not willing to participate, this may jeopardise your payment.
     
    But with an L/C Guarantee, your bank’s payment is assured. If the bank receives no payment from abroad, EKF pays compensation. Therefore, even risk-averse banks are able to participate in letter of credit transactions.
     
    This allows you to protect your exports from loss, while at the same time focusing on succeeding in the export markets.
  • How does L/C Guarantee work?

    ​With an L/C guarantee from EKF, your bank is protected against loss if the foreign bank fails to make the agreed payment.
    ​Then you can sign an export contract and arrange with your foreign buyer for the order to be paid by a letter of credit. Your buyer asks his bank to open the letter of credit for your bank.
  • What does L/C Guarantee cost?

    ​Your company’s bank pays a premium for an EKF L/C Guarantee.
  • Terms & conditions regarding L/C Guarantee

    Who is eligible for an L/C Guarantee?
    Danish and foreign banks confirming letters of credit.

    How much does an L/C Guarantee cover?
    No limit applies to the amount covered by an L/C Guarantee.
     
    What is the term of an L/C Guarantee?
    The guarantee provides cover until the L/C payment has been made. However, the maximum credit term is 2 years.
    In case the credit term exceeds 2 years, please select EKF´s Financing Guarantee. (See Financing Guarantee)
     
    What does EKF cover?
    EKF pays compensation if your company’s bank makes a loss on an export order as a result of commercial or political risks.

    Commercial risk means that your buyer’s bank is unable to pay due to, for example, liquidation or insolvency.
     
    Political risk means that your bank does not receive payment from the foreign buyer’s bank due to impediments in the country you are exporting to.
    Such impediments include war or civil war, currency shortage, restrictions on use of currency, import or export bans, and interventions by local authorities that make it impossible to receive payment for the products.
     
    EKF normally covers between 50 and 95% of the bank´s loss, so the bank´s deductible is a minimum of 5%.

Advantages of L/C Guarantee

An L/C Guarantee is the safest method of payment in the world
You have the best security – a confirmed letter of credit – that a buyer abroad is able and willing to pay.

Immediate payment
Your payment is already guaranteed by your customer’s bank before the delivery of the goods. Therefore, you will receive payment shortly after the customer receives the goods, which strengthens your cash flow. At the same time, you will have the security of knowing that you will be paid on time and that the order cannot be cancelled or changed without your acceptance.
EKF pays compensation for loss
Your bank bears the risk associated with the letter of credit. An L/C Guarantee from EKF ensures that EKF will pay compensation to your bank if your bank is not paid by the bank abroad.
 
No reason to be nervous
An L/C Guarantee allows you to accept orders from markets that you would otherwise be unwilling to venture into. You assume no risk.

What is L/C Guarantee?

A letter of credit is a payment guarantee provided by your customer’s bank and is considered to be one of the safest methods of payment in international markets.
 
Letters of credit are a widely used method of payment in international trade, as the rules on letters of credit are recognised by banks worldwide.
 
When you export goods and services using letters of credit as a method of payment, your customer’s bank undertakes to pay your bank, which will pay you.
 
This entails that your bank bears the risk that the foreign bank will default on payment.
Therefore, banks are not always willing to participate in letter of credit transactions. If your bank is not willing to participate, this may jeopardise your payment.
 
But with an L/C Guarantee, your bank’s payment is assured. If the bank receives no payment from abroad, EKF pays compensation. Therefore, even risk-averse banks are able to participate in letter of credit transactions.
 
This allows you to protect your exports from loss, while at the same time focusing on succeeding in the export markets.

How does L/C Guarantee work?

​With an L/C guarantee from EKF, your bank is protected against loss if the foreign bank fails to make the agreed payment.
​Then you can sign an export contract and arrange with your foreign buyer for the order to be paid by a letter of credit. Your buyer asks his bank to open the letter of credit for your bank.

What does L/C Guarantee cost?

​Your company’s bank pays a premium for an EKF L/C Guarantee.

Terms & conditions regarding L/C Guarantee

Who is eligible for an L/C Guarantee?
Danish and foreign banks confirming letters of credit.

How much does an L/C Guarantee cover?
No limit applies to the amount covered by an L/C Guarantee.
 
What is the term of an L/C Guarantee?
The guarantee provides cover until the L/C payment has been made. However, the maximum credit term is 2 years.
In case the credit term exceeds 2 years, please select EKF´s Financing Guarantee. (See Financing Guarantee)
 
What does EKF cover?
EKF pays compensation if your company’s bank makes a loss on an export order as a result of commercial or political risks.

Commercial risk means that your buyer’s bank is unable to pay due to, for example, liquidation or insolvency.
 
Political risk means that your bank does not receive payment from the foreign buyer’s bank due to impediments in the country you are exporting to.
Such impediments include war or civil war, currency shortage, restrictions on use of currency, import or export bans, and interventions by local authorities that make it impossible to receive payment for the products.
 
EKF normally covers between 50 and 95% of the bank´s loss, so the bank´s deductible is a minimum of 5%.
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