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Stuart
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A non-operative revolving documentary letter of credit is a document of international commerce
against which payment is effected. It is an irrevocable undertaking by the issuer (e.g. a bank) to ensure that payment is made on an obligation. The risk of nonpayment by the buyer is handled by the credit of a bank.
At the same time, the seller is not paid until the documents presented evidence shipment of the goods.
Revolving letter of credit was developed for multiple shipments. Instead of arranging a new letter of credit for each shipment, the buyer opens a L/C that revolves, a fixed amount is available which is replenished when exhausted.
A L/C may also revolve in time, when an amount is available in fixed installments over a pre-defined period.
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