Letter of Credit
A Letter of Credit (LC or L/C) is a common banking tool used in international trade to make sure sellers get paid and buyers get their goods. Think of it like an official promise from a bank to pay the seller on behalf of the buyer. It's important in logistics and trade consulting because it reduces risk for both parties when dealing with international shipments. Consultants who understand Letters of Credit help companies choose the right type, prepare the required documents, and avoid costly mistakes in international trade deals.
Examples in Resumes
Advised clients on proper documentation and compliance for Letter of Credit transactions
Managed international trade operations involving Letters of Credit worth over $5M annually
Successfully processed over 100 L/C transactions for various import/export clients
Typical job title: "Trade Finance Consultants"
Also try searching for:
Where to Find Trade Finance Consultants
Professional Associations
Example Interview Questions
Senior Level Questions
Q: How would you handle a discrepancy in Letter of Credit documentation?
Expected Answer: A senior professional should explain the process of reviewing discrepancies, communicating with banks and clients, and understanding available options like seeking amendments or waivers. They should also mention preventing future issues through proper document preparation.
Q: What strategies would you recommend to minimize Letter of Credit costs for clients?
Expected Answer: Should discuss negotiating bank fees, choosing appropriate LC types, timing considerations, and proper document preparation to avoid amendment fees and discrepancy charges.
Mid Level Questions
Q: What are the main types of Letters of Credit and when would you use each?
Expected Answer: Should explain basic differences between sight, deferred payment, and standby LCs in simple terms, with examples of when each type is most appropriate for different business situations.
Q: How do you ensure compliance with LC terms and conditions?
Expected Answer: Should discuss document checking procedures, common requirements, timing considerations, and the importance of attention to detail in preparing and reviewing LC documents.
Junior Level Questions
Q: What is a Letter of Credit and why is it used in international trade?
Expected Answer: Should explain that it's a bank's promise to pay, used to reduce risk in international trade, and describe the basic process of how it works.
Q: What are the main documents required in a Letter of Credit transaction?
Expected Answer: Should list and briefly explain common documents like commercial invoice, bill of lading, packing list, and certificate of origin.
Experience Level Indicators
Junior (0-2 years)
- Basic understanding of LC process
- Document preparation and checking
- Knowledge of international trade terms
- Basic export/import documentation
Mid (2-5 years)
- Managing LC transactions independently
- Handling discrepancies and amendments
- Client advisory on LC types
- Understanding of bank requirements
Senior (5+ years)
- Complex LC structure planning
- Risk assessment and mitigation
- Team leadership and training
- Strategic trade finance consulting
Red Flags to Watch For
- No knowledge of basic international trade terms (Incoterms)
- Unfamiliarity with common trade documents
- Lack of attention to detail in document review
- Poor understanding of banking procedures
- No experience with international business communication
Related Terms
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