⏳ DEFERRED LETTER OF CREDIT (L/C)
US Capital Private Bank Knowledge Base
📖 What is a Deferred Letter of Credit?
A Deferred Letter of Credit (L/C) is a type of letter of credit that provides for payment to be made at a future specified date, rather than immediately upon presentation of documents. Unlike some letters of credit, it does not require a draft to initiate payment.
⚙️ Key Features
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Payment is made after a set deferment period—the buyer has extra time before funds are released.
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Typically used in transactions where the buyer requests a credit period to manage cash flow.
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Does not require a draft or bill of exchange to be drawn on the bank.
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The payment date and conditions are clearly stipulated in the letter of credit.
💡 Purpose and Benefits
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Provides the buyer with time to pay after receiving goods or services.
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Useful in transactions where the buyer wants extended credit terms.
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Helps in building trust in trade relationships by offering flexible payment options.
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Protects the seller by guaranteeing payment on the agreed future date.
⚠️ Considerations
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Sellers must be willing to accept payment after a delay.
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The deferred payment date must be clearly specified in the letter of credit.
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Buyers should ensure they have the funds available by the payment date to avoid defaults.
🔄 Related Terms
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Letter of Credit (L/C) – A bank’s guarantee of payment upon meeting documentary conditions.
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Usance Letter of Credit – Similar to deferred L/C, with payment due after a specific credit period.
📞 Contact US Capital Private Bank
📧 Email: [email protected]
🌐 Website: https://uscapitalprivatebank.com