Ans to the question: 01
Garment exporters generally prefer three main types of Letters of Credit (L/Cs):

1. Confirmed Irrevocable Letter of Credit: This type of L/C offers the highest level of security for the exporter. The issuing bank (buyer's bank) guarantees payment to the exporter's bank upon presentation of compliant documents, regardless of the buyer's ability to pay. This provides a strong financial guarantee for the exporter.

2. Sight Letter of Credit: A sight L/C ensures the exporter receives immediate payment upon presenting the required documents to their bank. This offers faster access to funds compared to usance L/Cs (with deferred payment terms). This can be beneficial for exporters, especially for smaller businesses that rely on quicker cash flow.

3. Back-to-Back Letter of Credit: In cases where the exporter needs to secure raw materials or components from suppliers, they may use a back-to-
back L/C. This involves two L/Cs: one issued to the exporter by the buyer's bank, and another issued by the exporter's bank to the supplier.

Here's a breakdown of why these types are preferred:

1. Reduced Risk: Confirmed L/Cs eliminate the risk of the buyer failing to make payment, even if they become insolvent. Sight L/Cs minimize the waiting time for receiving funds.
2. Stronger Negotiating Position: Having confirmed L/Cs as a payment term strengthens the exporter's bargaining position during negotiations with potential buyers.
3. Improved Cash Flow: Sight L/Cs ensure exporters receive payment immediately upon shipment, improving their cash flow.

It's important to note that L/Cs can be complex and involve fees. The choice between a confirmed or sight L/C will depend on the specific circumstances of the transaction, the exporter's risk tolerance, and their negotiating power with the buyer.

Ans to the question: 02
The Bill of Lading (B/L) is a critical document in the negotiation process, particularly in international trade transactions involving shipments of goods such as garments. Here's why the Bill of Lading is so important in negotiation:
• Proof of Shipment
• Title to Goods
• Receipt for Goods
• Facilitates Financing
• Documentation Requirements
• Dispute Resolution