Transferable L/C
Category: Payments
Definition (plain English)
A transferable LC allows the first beneficiary to transfer part or all of the credit to another beneficiary, often used by traders or intermediaries.
Why it matters commercially
Transferability can help fund a supplier behind a trader, but wording, margin protection, document substitution, and bank permissions must be managed carefully.
Example
A trader used a transferable LC so the end buyer bank supported the factory shipment while the trader controlled invoice substitution and margin privacy.
Common mistake
Assuming any LC can be transferred or that transfer solves supplier payment without checking bank rules, substitution documents, and confidentiality exposure.
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