Letters of Credit and Bank Guarantees are the two most commonly used trade finance instruments in an international trade deal. Both are issued by a bank or legal financial institution to mitigate the payment risks between the parties as well as to safeguard the parties’ interests. Both demonstrate that the buyer/importer will pay the beneficiary/seller/exporter on time. In case, if the buyer is unable to do so, the issuing bank will step in and take the charge for the same. But they work slightly in different ways in different situations. Read more: https://www.axioscreditbank.com/blogs/which-is-a-better-choice-a-letter-of-credit-or-bank-guarantee