Irrevocable Letter Of Credit - ILOC

AAA

DEFINITION of 'Irrevocable Letter Of Credit - ILOC'

Correspondence issued by a bank guaranteeing payment for goods and services purchased by the one requesting the letter. An irrevocable letter of credit, or ILOC, cannot be canceled or modified in any way without explicit consent by the affected parties involved. For example, the issuing bank has no power to change the terms of an ILOC simply because the letter requester is having second thoughts. It should be noted, however, that ILOCs are in effect only for a specified time period and do, in fact, expire at a pre-determined point.

INVESTOPEDIA EXPLAINS 'Irrevocable Letter Of Credit - ILOC'

Like many other forms of bank correspondence, irrevocable letters of credit are transferred and authenticated through SWIFT, as MT700s (message type 700). ILOCs give far more payment security to beneficiaries than revocable letters of credit and are particularly desirable for construction projects. This is because they are not subject to claims of preference in the result of a bankruptcy filing.

RELATED TERMS
  1. Transferable Letter Of Credit

    A letter of credit that permits the beneficiary of the letter ...
  2. Sight Letter Of Credit

    A letter of credit that is payable once it is presented along ...
  3. International Financial Reporting ...

    A set of international accounting standards stating how particular ...
  4. Fully Funded Documentary Letter ...

    A written promise of payment provided by a buyer to a seller ...
  5. Accommodation Endorsement

    A written agreement from one entity to back the credit liability ...
  6. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a ...
Related Articles
  1. What Is The World Trade Organization?
    Economics

    What Is The World Trade Organization?

  2. What's the difference between a bank ...
    Investing

    What's the difference between a bank ...

  3. How Bank of America Holds 1/8 of All ...
    Stock Analysis

    How Bank of America Holds 1/8 of All ...

  4. JPMorgan Chase: Too Big (And Profitable) ...
    Stock Analysis

    JPMorgan Chase: Too Big (And Profitable) ...

comments powered by Disqus
Hot Definitions
  1. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  2. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  3. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  4. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  5. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  6. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
Trading Center