when does payment occur with a letter of credit 
a letter of credit is like an escrow account in that payment to the beneficiary only happens when the other party performs a specific act or meets other performance criteria spelled out in the letter of credit agreement 11the bottom lineletters of credit can play an important part in trade transactions there are different types of letters of credit that may be used depending on the circumstances if you need a letter of credit for a business transaction your current bank may be the best place to begin your search however you may need to expand the net to include larger banks if you maintain accounts at a smaller financial institution 