Guarantee to an exporter that the importer of his goods will pay immediately for the goods ordered by him, is known as

The term for a guarantee to an exporter that the importer of his goods will pay immediately for the goods ordered by him is known as a "Letter of Credit".

Here are the steps explaining how it works:

1. The importer applies for a Letter of Credit from his bank (known as the Issuing Bank). He needs to specify the amount of money and the time period in which the Letter of Credit will be valid.

2. The Issuing Bank then sends the Letter of Credit to the exporter's bank (known as the Advising Bank), usually located in the exporter's country.

3. The Advising Bank verifies the Letter of Credit for authenticity and forwards it to the exporter.

4. The exporter then ships the goods to the importer and presents the shipping documents to his bank (the Advising Bank).

5. The Advising Bank checks the documents against the Letter of Credit. If the documents comply, the bank pays the exporter and sends the documents to the Issuing Bank.

6. The Issuing Bank now checks the documents. If they comply, it reimburses the Advising Bank.

7. The Issuing Bank then gives the documents to the importer, who can now claim the goods from the carrier.

In this way, the exporter is guaranteed payment as long as he complies with the terms of the Letter of Credit. The importer is also protected because he only has to pay when he receives proof that the goods have been shipped.