Documentary letter of credit
A documentary letter of credit or commercial letter of credit is a payment mechanism in international trade which are issued by a bank or a financial institution. LC’s comes along with document collection either document against payment or document against acceptance.
ITF holds the credit facility with the numerous top-rated banks and financial institutions to support global trade, letters of credit practices are governed by the International Chamber of Commerce (ICC) as per Uniform Customs and Practice for Documentary Credits (UCP) terms.
* ITF offers only with document against payment terms due to risks and bank restrictions. Check with us to know more.
* Some of our issuing banks are Wells Fargo, IDB New York, Bank Winter. Ag. Co and others.
Sight letter of credit
At sight letter of credit (LC) is a quick payment method, Once the issuing bank receives the documents from the advising bank. The buyer needs to pay the seller to release the documents to clear the shipment. This type of LC is an advantage for the seller to collect the payment immediately.
Usance letter of credit
The Usance or Deferred Payment – Letter of Credit is payable at a proposed date after the conforming documents are presented by the seller to the advising bank. This type of LC has a privilege for the buyer to extend the payment schedule to collect the documents from the issuing bank and payable before the maturity date as agreed by both parties.
Standby Letter of Credit
The Standby Letter of Credit (SBLC) is an irrevocable guarantee or a commitment issued by the bank or a financial institution. A promise to the beneficiary to pay on behalf of the applicant. SBLC’s are very much alike documentary letters of credit, their main difference is that unlike DLC’s, they only become operative in case the applicant defaults, then the beneficiary in whose favor the SBLC was issued, can draw on the SBLC and demand payment.
Document Against Payment (D/P)
Document against payment is usually used in a Sight letter of credit terms, which means you only get the shipment documents when settling the supplier’s payment.
Document Against Acceptance (DA)
D/A terms we don’t do it due to the high risk of nonpayment, Instead, we give Usance LC with acceptance message during the issuance, which means DA terms will be implemented when beneficiary and advising bank demand us to release the documents solely upon their risk.
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At Sight letter of credit
Usance letter of credit with acceptance
Standby letter of credit (SBLC) - As per UCP Commercial terms.
Document against acceptance (D/A)
Document against payment (D/P)
* ITF offers sight letter of credit in large numbers from prominent banks, We have excellent underwriting team and we worked in the vast areas from international trade, construction, green projects, government tendering etc. feel free talk to us or send us filled application form or contact us.
* Our sales & support team will guide you throughout the application process, drafting, service agreement, invoicing and issuance.
How does a letter of credit work?
The applicant (buyer) opens an LC to the seller (beneficiary) to limit the non-payment risk and follows the payment terms as directed by the issuing bank. If the buyer defaults, the issuing bank will be liable to oblige the beneficiary’s demand with the help of the advising (sellers) bank.
ITF’s issuance procedure & Advantages of using our letter of credit.
Simply send a proforma invoice, or else we shall provide the application form, upon the filled application we will prepare the specimen copy of the SWIFT draft. If there is an amendment we shall revise the draft. Once confirmed then the client (applicant/buyer) needs to provide KYC, Incorporation certificates, Shareholder pattern, Passport, or any national ID of the main shareholder. Then ITF we do the due diligence, upon approval, we shall provide the invoice, service agreement. Then issuance of the LC to the advising bank.
The main benefit is International trade finance (ITF) offers a letter of credit by extending its trade facility to the applicants (buyers). Sellers on the other hand stay at ease that LC issued by the ITF is asset-backed. Talk to us to know more.