What Is Bank Comfort Letter And How It Can Be Used?

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Many of us would have not heard about bank comfort letter, but not everyone knows how to use it. This comfort letter also known as proof of funds is mostly used by the individuals who are running the business. It is used to assure the vendor or your business partner that you can complete the deal. There are many banks that offer this service so that many people who are running a business can use it to improve their business. 

So, what is a comfort letter? It is the letter that is issued by the bank on behalf of the client assuring that they have sufficient funds to complete the business deal as agreed. It is mostly used where the huge amount is involved in the deal. The bank assures for the amount that it will complete the business deal when the client is unable to fulfill the payment.

Facts to be known about the bank comfort letter :

Usually, the bank comfort letter will be structured in such a way that there are no unplanned legal formalities and unnecessary risks are added to it. The letter will include all the statements made by the bank or the company which is valid and also have the facts and other opinions in it. The other features of the proof of funds include having the disclaimer, a well-detailed use of the credit service, the outline of the service and makes sure that it doesn’t create any unplanned tax liabilities.

Another feature is that the comfort letter will not have any expiry date but it will expire after the provision of the stated services. If you wish to start new trading then you have to get a new comfort letter otherwise if you wish to continue the services then you can get the original comfort letter from the bank. But while getting the proof of funds make sure all the details are filled correctly since if there are any mistakes in it then the bank will not complete the process in the worst case. 

But one should note that the comfort letter will not provide the payment but it guarantees the seller that they will get the payment. The bank will verify the credit history of the client and then issue the comfort letter only if the client will be able to fulfill the payment. This will provide a promise so that both the parties can conduct the transaction without any worries. This letter survives the purpose that is similar to the other letter of credit. Since this provides detailed information about the agreement or contract, this comfort letter is preferred by many businessmen nowadays.

All the information will be included in the letter so that there will be no issues in the future. Since this bank comfort letter can be used by all the business people to fulfill the business transaction, whatever may be your business type, you can apply for this letter in the bank and conduct hassle-free trading.

Location: Mwali, Comoros

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