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What is an irrevocable letter of credit?

April 26, 2017credit irrevocable letter

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What is an irrevocable letter of credit?

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An irrevocable letter of credit is a product banks offer to their corporate customers to provide business financing. It is used to secure payment between a buyer and seller. The uncommon revocable letter can be modified by the bank without notifying the parties involved. The more common irrevocable letter of credit can only be modified when all parties involved agree to the modification. There are two types of irrevocable letters of credit: a standby letter of credit and a documentary letter of credit.