Revolving L/C
Category: Payments
Definition (plain English)
A revolving LC restores its value or shipment allowance after use so repeated deliveries can be covered without issuing a new LC each time.
Why it matters commercially
It can support repeat supply programs, but limits, reinstatement rules, shipment windows, and draw caps decide the real credit protection.
Example
A monthly ingredient program used a revolving LC with a per-shipment cap and automatic reinstatement after each compliant document presentation.
Common mistake
Setting a revolving LC without clear shipment frequency, expiry, reinstatement mechanics, cumulative limits, and exposure if one shipment is disputed.
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