Letters of credit: Retreat from open account?

Laurence Neville
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One area of increased interest in the wake of the credit crunch is traditional trade financing products such as letters of credit (LC). In recent years, trading has increasingly moved to open account rather than LC in a bid to lower costs. But Tan Kah Chye, global head of trade finance at Standard Chartered in Singapore, says that as supply chain participants have become cautious about the financial stability of their trading partners they have once again begun to consider LC.