Letter of Credit Forum

Hi Friend,

Bank Payment Obligation theoretically will substitute open account transaction, where banks will undertake to pay on behalf of the buyer the bank of the seller. Naturally it may be possible that BPO will be used as l/c, specially standby l/c where there is no necessity to have shipping documents.

By issuing a BPO, as l/c do you need bank credit facility. Open account transaction need not to do so, even if buyer will pay, inside the prices, costs relating to the risk of insolvency, some time covered by ECA or Credit Insurance.

Few transactions appear as BPO, probably due by the huge cost to have a device that via SWIFT message adjust the required data.

Other unknown

Ciao