What is the importance of LC or Letter of Credit?

It makes the selling process easier specially when the selling be between tow parties out side the country as it encourage the parties to deal together in a guaranteed process

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Below points shows the importance of Letter of Credit.

• The seller has the obligation of buyer's bank's to pay for the shipped goods.
• Reducing the production risk, if the buyer cancels or changes his order
• The opportunity to get financing in the period between the shipment of the goods and receipt of payment (especially, in case of deferred payment).
• The seller is able to calculate the payment date for the goods.
• The buyer will not be able to refuse to pay due to a complaint about the goods

is 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.

The importance is the it plays the needed role to guarantee both of the seller and purchaser in a legal and satisfied  way . Other explanations also are correct given by colleges . 

The most important task is to secure the proper conduct of transactions. Under uncertainty every form is good

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A L-C   is a document, typically from a bank (issuing bank), assuring that a seller (beneficiary) will receive payment up to the amount of the letter of credit, as long as certain documentary delivery conditions have been met. In the event that the buyer (applicant) is unable to make payment on the purchase, the beneficiary may make a demand for payment on the bank. The bank will examine the beneficiary's demand and if it complies with the terms of the letter of credit, will honor the demand

Letters of credit accomplish their purpose by substituting the credit of the bank for that of the customer, for the purpose of facilitating trade. There are basically two types: commercial and standby. The commercial letter of credit is the primary payment mechanism for a transaction, whereas the standby letter of credit is a secondary payment mechanism.

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1- Elimination of risk of losing money for the Buyer2- Payments are made after fulfilment of the Seller's contractual obligations3- Transfer of ownership over shipped goods to the Buyer within the period indicated in the LC and according to other terms.

 it is used as of the safe tool to  the receivables of  a company be making the bank   lining with the customer to save the customer payment from losing