what is suppliers letter of credit and how does it operate. A detailed answer will be highly appreciated?

Answer 1

yes

Answer 2

Definition of a letter of credit:

A bank's written payment undertaking, on behalf of a buyer, to pay a seller, a given sum of money, upon presentation of documents representing the supply of specified goods, these documents meeting the terms of the letter of credit, and being presented within a specified time, and at a specified place.
Transferable letter of credit: This is the favorite instrument of the traders and middlemen to offer secure terms of payments to third parties such as their suppliers (second beneficiary in the letter of credit). When the buyer pays the letter of credit, part of the proceeds is transferred to the second Beneficiary.

Deed of Assignment: Banking arrangement, under a letter of credit, whereby the Beneficiary of a letter of credit assigns part of the proceeds to a third party, e.g. a supplier.

Answer 3

For a detailed answer to your question, I recommend the following webpage and website...

http://www.creditmanagementworld.com/letterofcredit.html

They discuss in great detail the types of letters of credit and how they work.

Good luck.