How a Paper-Based Letter of Credit Secured €1.5 Million in Imports from China

Valentina Todorova
Jul 17
2 min read

Updated: Sep 13

Mitigating risks while facilitating smooth transactions is critical in international trade. One of our clients successfully leveraged a paper-based Letter of Credit (LC) to import over €1.5 million worth of goods from two suppliers in China. This approach not only ensured secure transactions but also showcased how a smart investment can unlock new markets.

The Value of the Letter of Credit

A Letter of Credit is a financial instrument that guarantees payment to sellers and delivery to buyers under agreed terms. It minimizes risks in international trade—especially when trust may be limited between the involved parties. According to Trade Finance Global, LCs are governed by ICC rules like UCP 600, which standardize international trade transactions across over 175 countries Juristopedia+15Trade Finance Global+15Trademo+15.

While most discussions around LCs focus on the SWIFT system for digital convenience, paper-based Letters of Credit still offer exceptional advantages, including flexibility and robust legal validity—making them a preferred option in high-stakes scenarios .

The €1.5 Million Trade Opportunity

Our client faced the challenging task of sourcing goods from two manufacturers in China. Instead of relying solely on digital tools like SWIFT, they opted for a hard-copy LC to secure their transactions.

Why Choose a Paper LC Over SWIFT?

Enhanced compliance clarity: explicit terms detailed in a physical document
Stronger legal certainty: traditional format recognized under UCP 600 financely-group.com +8hfw.com +8Allianz Trade Corporate+8 ilia.ae+1Investopedia+1 Wikipedia+15Trade Finance Global+15thewinningedgeindia.com+15
Tailored supplier terms: flexibility for individual needs and timelines

This personalized approach enabled the client to confidently pursue a dual-supplier strategy, safeguarding every aspect of the deals.

Cost Efficiency and Impact

The LC fee was 3.5% of the transaction value—totaling €52,500. While this may seem significant, it represented a prudent investment in securing €1.5 million of goods. Benefits included:

✅ Transaction security: payments released only upon document compliance
✅ Trust-building with top suppliers, enabling access to reliable partners
✅ New market entry, reducing hesitation and administrative barriers

Return on Investment (ROI)

The initial cost secured legal, financial, and strategic benefits. The LC fostered long-term partnerships, opening doors to future transactions beyond the pilot deal.

Key Benefits of Using a Paper-Based LC

Benefit	Description
Transaction Security	Payment only after meeting all LC terms
Supplier Access	Enables dealing with vendors without SWIFT
Legal Enforceability	Governed by UCP 600, recognized globally Wikipedia+12tulyp.io+12Trade Finance Global+12 credlix.com
Customization Capability	Ideal for complex, multi-party transactions
Cost vs. Risk Balance	Fee ~3.5% but mitigates much larger financial uncertainty

Unlocking New Market Opportunities

For businesses exploring international trade, a strategic use of instruments like the Letter of Credit—especially in paper form—is invaluable. They offer a route to:

Safeguard operations
Build credibility
Access challenging markets

This case shows how combining traditional tools with modern trade strategy can empower global growth.

📌 Final Thoughts

Securing €1.5 million in trade highlights the pivotal role of LCs in international commerce. A thoughtful cost-benefit analysis and smart use of document-driven security can not only protect business but also foster trusted, long-term relationships.