Documentary Letters of Credit

Get Letters Of Credit Issued With Zero Collateral

At Express Trade Finance, we are a globally recognized leader in Letters of Credit, deeply understanding the complexities of international trade. Our comprehensive guide to Documentary Letters of Credit (DLCs) is your key to hassle-free global transactions.

A Documentary Letter of Credit is a payment guarantee issued by a financial institution on behalf of a buyer, ensuring the seller receives payment upon meeting specified documentary requirements within a set timeframe. This tried-and-true method is essential for international transactions, offering security for foreign exporters and assurance for importers.

Sellers get paid once the terms are fulfilled, and buyers can be confident that payments are made only when conditions are met. This creates a balanced, reliable compromise that safeguards the interests of both parties, making global trade smoother and more secure.

Explore our guide and discover how Express Trade Finance can help you navigate the world of international trade with confidence and ease.

The Documentary Letters of Credit Are Mainly Divided into Two Types:

Letters of Credit at Sight

An LC at Sight is a powerful banking instrument that guarantees both the exporter and importer meet their delivery and payment terms through their respective financial institutions. The term "At Sight" means the issuing bank will release the required shipping documents immediately upon the buyer’s payment clearance, ensuring a smooth and secure transaction for both parties. Benefits Of Sight LC : The risk of advance payment is reduced to the seller. The risk of shipping goods without any guarantee is minimized.

Usance Letters of Credit

Usance LC, or Deferred Payment LC, provides flexible payment terms tailored to the needs of both parties. This popular instrument allows payment to be deferred for a predefined period, typically 60, 90, 120, or 180 days. It’s a favorite among importers and exporters with established relationships, offering the convenience of extended credit while ensuring both sides meet their contractual obligations. Benefits of Usance LC: Customers can defer payments, enhancing their cash flow models. Buyers receive goods before payment is due, allowing ample time to inspect and ensure quality standards are met.

DLC Issuance Procedure- Step By Step

DLC Issuance Procedure:

1. In order to finalizing the draft , we need following documents/ information.

i. Filled-in Application form/ Proforma Invoice or Sales Contract
ii. Company Trade License
iii. Passport copy of the owner and shareholders
iv. Last three months bank statement
v. One-year audited financials
vi. Shareholding List

2. After acquiring all the above documents/information, we will assist the client in selection of the issuing bank/financial institution and assist in finalizing the draft for client’s review.

3. Upon receiving the draft copy of the instrument, client must thoroughly review the draft for any corrections, additions or removal of information. Should there be any amendments, we can assist in amendment of the draft accordingly to match clients’ preferences. Once the draft is approved by all the related parties, client will need to send us a copy of the draft with authorized signatory’ sign and company stamp on the draft as client’s approval along with an email confirming the same.

4. We will raise the invoice for the charges agreed and client will make the remittance against the invoice.

5.Only after we receive the payment for the raised invoice, we will assist on following with the issuing bank/financial institution consulted and provide assistance in issuing the instrument through swift/courier within 7 working days depending the issuing bank/financial institution policy.

6. Simultaneously we will assist the client in receiving the issued copy through email for reference and record keeping.

Note: The issuing charges would depend on the amount of the LC required, the type of the LC, the issuing bank selected for issuance and the beneficiary bank to which it is to delivered.