⏳ Usance (Time) Credit
US Capital Private Bank Knowledge Base
Definition:
A Usance Credit, also known as a Time Credit, is a type of letter of credit that requires payment to be made at a specified future date rather than immediately upon presentation of documents.
Key Points:
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Payment is made against drafts that specify a future payment date (the usance period).
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Allows buyers (applicants) extra time to sell the goods before making payment to the issuing bank.
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Provides flexibility in cash flow management for buyers.
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Commonly used in international trade where deferred payment terms are agreed.
Importance:
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Helps importers manage working capital more effectively.
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Facilitates smoother trade transactions by allowing deferred payment terms.
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Reduces immediate financial burden on the buyer.
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