A Typical Letter of Credit Transaction Here is what typically happens when payment is made by an irrevocable letter of credit confirmed by a local bank: •After the exporter and customer agree on the terms of a sale, the customer arranges for its bank to open a letter of credit. (Delays may be encountered if, for example, the buyer has insufficient funds.) •The buyer's bank prepares an irrevocable letter of credit, including all instructions to the seller concerning the shipment. •The buyer's bank sends the irrevocable letter of credit to a local bank, requesting confirmation. The exporter may request that a particular bank be the confirming bank, or the foreign bank selects one of its local correspondent banks. •The local bank prepares a letter of confirmation to forward to the exporter along with the irrevocable letter of credit. •The exporter reviews carefully all conditions in the letter of credit. The exporter's freight forwarder should be contacted to make sure t...