Additionally, suppliers tend to like letters of credit as they can often transfer letters of credit to pay for their raw materials or indeed in some countries they can use these letters of credit as collateral to obtain business-to-business finance from their bank.
However, letters of credit facilities can be expensive and, because it is a specialist area, it is difficult to evaluate costs. Letters of Credit can seem bureaucratic and tedious but accuracy in print and translation are essential. A minor mistake could be costly.
Foreign Exchange
Most importers are purchasing or selling in foreign currencies. Historically, fluctuations in exchange rates can be the difference between a good year and an average one.

There are several cost-effective options where you can either use the lender’s own facilities to hedge against exchange risks or Business Money can provide you with alternatives for spot or forwarding purchasing.

The two most common methods are as follows:
1) Forward Contracts
Achieves certainty of future exchange rates. Forward Contracts will allow you to commit to a rate now for your future currency purchase requirements. Can be for specific dates or for a certain period. The client must complete the contract even if exchange rates move in an unfavorable direction.

2) Option Contracts
A contract that gives the buyer the right, but not the obligation, to buy or sell futures currency at a specific price within a specified period of time. The seller of the option has the obligation to sell the foreign currency to or buy it from the option buyer at the exercise price if the option is exercised. The client pays a premium for the option which is paid whether or not the option is exercised.