What is letter of credit in SAP SD-FT - Foreign Trade?

SAP Term: letter of credit

• Component: SD-FT

• Component Name: Foreign Trade

• Description: A letter issued by a bank to obtain payment for goods. When a letter of credit is confirmed, the advising bank guarantees payment only if all stipulations in the letter of credit are conformed to exactly.

Smart SAP Assistant

• Key Concepts: 
  A letter of credit (LC) is a document issued by a bank that guarantees payment to a seller for goods or services provided to a buyer. It is used in international trade transactions to provide assurance to the seller that the buyer will pay for the goods or services as agreed upon in the contract. In SAP, the letter of credit is managed in the SD-FT Foreign Trade component. 
  
  How to use it: 
  In SAP, the letter of credit is managed in the SD-FT Foreign Trade component. The user can create and manage letters of credit, view their status, and process payments. The user can also set up payment terms and conditions, such as payment deadlines and interest rates. 
  
  Tips & Tricks: 
  When creating a letter of credit in SAP, it is important to ensure that all information is accurate and up-to-date. This includes the buyer’s name, address, and contact information; the seller’s name, address, and contact information; and any other relevant details. Additionally, it is important to ensure that all payment terms and conditions are clearly stated in the letter of credit. 
  
  Related Information: 
  For more information on letters of credit in SAP, please refer to the SAP Help Portal or contact your local SAP support team. Additionally, there are many online resources available that provide detailed information on letters of credit and how they are used in international trade transactions.