Revolving Letter of Credit

A Letter of Credit that can cover multiple payments for a buyer is known as a Revolving Letter of Credit. In this way the buyer will not have to apply for a new document every time as a single letter can cover multiple transactions.

In the first paragraph, mention the amount of the credit applied for and for what time period. Inform the buyer that the financial institution has decided to issue the letter and on what terms.

In the second paragraph, mention the approved details of the Letter of Credit and the date on which the payment will be available to the buyer. In the concluding text, warn the customer regarding any consequences on a failure to make payments.

Instructions

  • 1

    Sample Revolving Letter of Credit


    Carter Hopkins
    Managing Director,
    Hadley Exports Limited
    November 24, 2012

    Subject: Revolving Letter of Credit

    To Whom It May Concern

    I am writing this letter in reference to the request of payments of $4,000 to be made by us at the end of every month. You will be pleased to know that the bank management has decided to issue a Letter of Credit in this regard and will make the payments on your behalf.

    We wanted to bring it to your notice that as per your requirement, Silicon National Bank will issue a Revolving Letter of Credit, according to which a payment of $4,000 will be made available on the 26th of each month for six months starting from December, 2012.

    Silicon National Bank also requires you to thoroughly asses the terms and conditions of the contract and requires timely payments for all transactions. It has to be noticed that legal action can be taken against your firm in a failure to make timely payments.

    We are happy to help you in any way in the future also.

    Yours sincerely,
    Thomas Frank
    Branch Manager
    Atlas Road Branch, TX4556
    Silicon National Bank

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    Template of Revolving Letter of Credit


    [Recipient’s Name]
    [Recipient’s Title]
    [Recipient’s Company]
    [Date]

    Subject: Revolving Letter of Credit

    To Whom It May Concern

    This is in reference to the request your company .................... made for a credit of ................. at the end of each month starting from .................

    ..................... is pleased to bring it to your notice that the management has decided to issue a Revolving Letter of Credit in this regard to make the payments available in time for your company.

    We certainly expect the payments to be made in time and are hopeful that your firm will honour the terms and conditions of the contract to avoid any consequences in the future.

    Thanking You

    Yours sincerely,
    [Sender’s Name]
    [Sender’s Title]
    [Company’s Name]

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