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Documentary credit

A Documentary Credit (“D/C”) also known as Letter of Credit (“L/C”) is a method of payment where the buyer’s bank guarantees payment to the seller with the condition that the seller has to fulfil the terms specified in the L/C.

Benefits for the seller

  • The seller reduces the risks of not getting paid
  • The seller will improve its working capital – by presenting documents to Nordea soon after shipment of the goods payment is made within a few days
  • The seller can offer longer payment terms (credit) to the buyer and still get paid quickly, by selling the receivables to Nordea
  • Eliminate the risk related to the buyer's bank and country with a confirmation (guarantee) of the L/C by Nordea.
  • The banks involved will act according to the internationally accepted rules of the International Chamber of Commerce.


The buyer applies for an L/C with its bank. We recommend that the seller takes part in drafting of and agrees to the terms of the L/C on beforehand.

We recommend to use L/C when the trade relationship is new or the value of the trade is significant.

The same goes for when the goods are made to order or if it is a project delivery where payments are made as the work progresses or deliveries are made.

Through Trade Finance Global (Nordea's e-solution for Trade Finance transactions) you will receive and handle your export L/Cs electronically.

L/C terminology


Get in touch 

For more information about how we can support your business contact your Nordea adviser..