What is an irrevocable letter of credit?
A permanent mail of credit score is a financial instrument used by banks to guarantee a customer's obligations to a supplier. It is permanent because the mail of credit score cannot be modified unless all parties agree to the modifications.
Irrevocable letters of credit score are often used to facilitate international trade because of the additional risks involved. The permanent mail of credit score removes the seller's credit score risk by assuring the supplier that payment will be made by the customer's financial institution if the buyer does not pay the supplier.
In a permanent mail of credit score, the buyer is known as the applicant, the supplier is the beneficiary, the customer's financial institution is the issuing financial institution, and the seller's financial institution is the advising financial institution.
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