A letter of credit can take many forms, but the fundamental operation of this product is that it substitutes a company's credit risk for that of its bank with the bank effectively providing a guarantee of payment against certain of the company's obligations, up to a specified amount for a specified period of time should the company fail to make the necessary payments themselves. A letter of credit may well be a sub-limit within an RCF and is provided as part of a lender's ongoing relationship with a borrower. Getting into some of the more specific types of letters of credit, a standby letter of credit is used as a backup and is only relied upon by a supplier when something goes wrong. Under normal circumstances, the corporate will make a direct payment to its suppliers. However, if they are unable to do so, the bank steps in as the corporates guarantor, making the payment in their place. This may be used for rental agreements or insurance contracts, and is an example of a financial standby letter of credit. An alternative version is a performance standby letter of credit where the bank will provide compensation to a customer should the bank's client fail to deliver an agreed good or service. An alternative letter of credit is a trade letter of credit which helps to facilitate international trade. A supplier may be worried about taking an order from an overseas customer and not getting paid so would request the customer to obtain a letter of credit from their bank, which is then issued to the overseas supplier. This provides comfort to that supplier that they will receive payment for their goods. So the supplier will then feel comfortable in shipping the goods to the overseas customer. The overseas supplier will then present the letter of credits and the shipping documentation to the bank who will make payment to them. And then once the goods have been received by the customer they will make payment to their bank. In all these variations of letters of credit the parties seeking the letter of credit to reduce the credit risk they present will pay a fee for the service to the bank.