Red Clause Letter of Credit
A Red Clause Letter of Credit is a type of letter of credit that allows the beneficiary to receive an advance payment, typically against a receipt, before shipping the goods. This advance helps the exporter finance the production or purchase of goods, providing liquidity and facilitating smoother international trade transactions, thereby reducing financial strain on the exporter. However, from the buyer's perspective, it is less secure compared to a Green Clause Letter of Credit, as it requires additional documents to be provided for the advance payment.
