Businesses are shying away from letter of credit (L/C) transactions towards open account trading according to several sources, notably credit insurers, factors and purveyors of online L/C alternatives.

But according to a recent survey by Bank of America (BOA) of US manufacturers, L/Cs are still widely used.

Top position

The survey of chief financial officers (CFOs) found that L/Cs and cash management topped the list of most widely used products and services from lenders, with 66 per cent of CFOs saying these were the bank offerings they used most.

Foreign exchange services were the next most used products and services from lenders, with some 42 per cent of CFOs saying this was the bank offering they used most.

Other results

In other results of the survey, 39 per cent of the CFOs surveyed said credit availability from their current lender has increased over the past 12 months.

One in four CFOs expect their borrowing needs to increase in 2007, which according to BOA is the lowest percentage in the nine-year history of the survey.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.