A Transferable Letter of Credit enables the exporter or beneficiary (you) to give instructions to the paying bank (us) to make some or all of the credit available to a third party. It is primarily used by brokers and middlemen, rather than the ultimate suppliers.
A Transferable Letter of Credit is simpler and more reliable than Back-to-Back Letter of Credit arrangements.
The first diagram outlines the issuance and transfer of a letter of credit. The second diagram represents the shipment of goods, negotiation of documents and movement of funds in a transferable letter of credit. Both diagrams are assuming that you are the middleman.