A Usance or Deferred Letter of Credit is payable at a predetermined time after the presentation of required documents. It is why this trade financing arrangement is popular as Time LC or Term LC as well. It gives the buyer a grace period for payment as the buyer receives ordered goods immediately, but pays back the bank later on a decided date.
Under Usance LC, the issuing bank incurs a deferred payment undertaking or payment acceptance that they will pay on specific tenor or credit term. However, the payment is released when we receive documents complied with the LC terms.
The usance of bills varies from countries to countries and often ranges from two weeks to two months. It is mostly preferred by businesses that have closer seller and buyer relationship with each other.
Let us remind you that banks only deal with documents. Having said that, it is important for you to be sure that your counterpart doesn’t do fraud with your company. We recommend Usance LC for untested business relationships where you want to avoid advance payments.
Royal Bank Pacific is a genuine and reliable provider of Usance or Term Letter of Credit. Kindly contact us with your financial specifications to enable us to issue an appropriate Usance LC for you.