In the following list you will find the names of some of the most frequent letters of credit or LC used.

Unconfirmed: A LC is unconfirmed when the document supports only the guarantee of the issuing bank. The notifying bank simply informs the exporter about the terms and conditions of the LC without adding their payment obligations. The exporter bears the risk of paying the bank which is usually located in a foreign country.

There are also back to back LCs. In short, they are two LCs that together form a transferable LC. These kinds of letters allow exporters who are not subject to credit to sell their products aboard.

There are cases when the exporter that receives a LC to sell products abroad is in need of supplies that are bought abroad. In order for exporters to import supplies, other LC asr issued. The good news is that once one LC has been issued, getting a second one is much easier, even if the first one contains errors. It is the issuing bank who is responsible for the payment to the seller.

Many banks are reluctant to such agreements because back to back letters of credit involve two separate transactions. It is likely that several banks are involved and the risks of confusion and dispute are higher.

Financial institutions take especial measures to protect themselves from fraud with back to back LCs. For this reason, they demand all relevant documents to the exporter in order to issue the second LC. It is based on the first LC that the bank will issue the second one. The dates of the two documents are used to verify their validity. The second one expires before the first one but gives the exporter enough time to submit the documents to request payment.

A standby LC: Unlike the regular LC which is basically a payment mechanism, a standby LC is a kind of bank guarantee that is used to cover financial obligations for non-payment. The bank issues a standby LC that held by the seller provides the customer open account terms. If payment is carried out in accordance with the conditions set by the seller, the LC is not used. However, if the client cannot make payment, the seller presents a bill of exchange with copies of invoices to the bank along with other necessary documents. The standby LC generally expires after twelve months.