DIFFEREN
There are a lot of instruments which you can
monetize according to your need and get high returns.
And there are a lot of differences between all the
various kinds of bank instruments available.
The same way, SBLC and Bank guarantee has quite a
few differences although it seems similar.
When we talk about Standby Letter of Credit or SBLC,
we talk about an obligation taken on by a bank to make a payment once certain criteria are met.
Once these terms are completed and confirmed, the
bank will transfer the funds.
The letter of credit ensures the payment will be made
as long as the services are performed.
 Then again, a Bank Guarantee is basically a guarantee
of sum of money to a beneficiary.
 Unlike a letter of credit, the sum is only paid if the
opposing party does not fulfill the stipulated obligations under the contract.
 This can be used to essentially insure a buyer or seller
from loss or damage due to nonperformance by the other party in a contract.
When we talk about various differences between the
two, we also talk about differences in protection.
There is a legal difference between the two as a letter
of credit only protects the seller and the bank guarantee protects both the buyer and seller.
So when you are a buyer, you should prefer monetizing
the bank guarantee; and when you are the seller, you can opt for the letter of credit.
There is also a performance difference as sellers
prefer SBLC that to bank guarantee.
Since your bank advises the seller’s financial
institution that the credit letter exists, sellers often prefer that your bank perform by wiring these funds to the seller’s bank.
Sellers receive fast, guaranteed payment, including
currency conversion, if needed, direct to their bank account.
Bank guarantee is different because they don’t work
because of the difference in sale but due to the lack of performance by the buyer and seller.
These kinds of instruments help your large scale
business to a great extent.
When you think about bank instrument monetization,
think about all the instruments available and know the difference and benefits of each of these.
Knowing the benefits and understanding it will
help you make the right decision when you want to get the best out of your investment.
Take advice from someone who has the right
kind of knowledge before making any decisions.
THANKS