It is a safe way to get paid if it is the right type of LC, issued right and the rules are followed according to the contract. However, it is limited in it’s flexibility and it costs both parties money.

It is normally to recommend for e.g. larger shipments especially if there is a long time between order and shipment. If the local payments are questionable, you want an irrevocable letter of credit payable at your bank.

There is also revolving Letter of Credits allowing continuos shipments. Note however that if you as supplier do not completely comply with the LC, it is worth nothing. If you ship more or even less than the LC stipulated it is void. If the LC states no transhipments, and you do not follow that. The same occurs.