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Whenever there is an import or export of goods amongst borders there is commerce finance involved. Now to import the goods the corporate MHW needs to pay for the products, but it needs to be sure that the products should arrive as ordered and thus is hesitating in processing the payment. Let’s assume that there is an organization named MHW in India and this firm desires to import a certain number of goods from a supplier firm that’s positioned within the United States. The importer’s bank issues a letter of credit to the exporter through the exporter’s financial institution and guarantees to pay the required amount as soon as the exporter bank provides the valid documents proving the ordered goods have been loaded to the ship or another technique of transport. Now on the identical hand, the exporter can also be hesitant to ship the goods, with out being certain that the cost will arrive for the goods they provide.
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