letter of credit
US /ˈlet.ər əv ˈkred.ɪt/
UK /ˈlet.ər əv ˈkred.ɪt/
1.
a letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. In the event that the buyer is unable to make payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase.
:
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The importer secured a letter of credit from their bank to ensure payment to the overseas supplier.
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International trade often relies on letters of credit to mitigate payment risks.