Buying fibre, step 7 of 12
Sign the contract and open the letter of credit
The bank pays the merchant against the documents, which is what protects both sides.
A letter of credit means your bank pays the seller only against the shipping documents the contract names; a transfer (T/T) is simpler and rests on trust. Either way the money goes to the seller’s company account, never a personal one, and the paper you pay against is the pro forma invoice that repeats every line of the spec.
Tools for this step
- Cost of payment terms
Put the deposit, the days and your own borrowing rate in and read what the term costs you in interest, so two quotes on two different terms compare on one line.
Every tool for this guide, grouped by what you are trying to do, is on the tools page.