What is a usance letter of credit Can you tell me about it?

The so-called usance letter of credit means that after the beneficiary submits the documents, there is no discrepancy, then the issuing bank will accept the usance bill (usance acceptance letter of credit) and pay the beneficiary when the bill of exchange is due, or the issuing bank promises to pay when the forward payment date specified in the letter of credit expires (late payment letter of credit). That is, usance letters of credit are divided into usance acceptance letters of credit and delayed payment letters of credit.

A usance letter of credit is relative to a sight letter of credit, which is generally seen on a single day, that is, the day after the consignee's bank receives your documents.

Foreign Trade Pilot Network explains: usance credit refers to the issuing bank or its designated payment bank after receiving the usance bill from the beneficiary, does not pay immediately, but accepts first, and then pays after the bill of exchange expires.

The usance letter of credit can be divided into bank acceptance usance letter of credit and firm acceptance usance letter of credit according to the different acceptors.

Banker's acceptance credit) refers to a letter of credit with the issuing bank or another bank designated by it as the payer. When using this kind of L/C, the negotiating bank at the place of export generally examines the usance bills and documents submitted by the beneficiary in accordance with the provisions of the L/C, and then sends them to the issuing bank or its designated paying bank at the branch or ** bank where the negotiating bank is located to request acceptance.

Trader's acceptance credit) is a letter of credit in which the issuer is the payer of the usance bill.

The usance bill shall be accepted by the issuer, but the issuing bank shall still be responsible for the acceptance and payment due of the issuer. The firm acceptance bill can also be discounted, but its discount conditions are worse than that of the bank acceptance bill, so the beneficiary is generally not willing to accept the letter of credit accepted by the firm and requires the issuance of the bank acceptance letter of credit.

Fake usance letters of credit.

The main differences with usance letters of credit are as follows:

1.The basis for issuance is different. Fake usance letters of credit are based on ** contracts for payment at sight; The usance letter of credit is based on the ** contract of usance payment.

2.The terms of the letter of credit are different. There is a "false usance" clause in the fake usance letter of credit; In a usance letter of credit, there is only a clause on who bears the interest.

3.The bearers of interest are different. Discount interest on fake usance letters of credit.

to be borne by the importer; The discount interest on the usance letter of credit is borne by the exporter.

4.The time of receipt is different. The beneficiary of a fake usance letter of credit can collect foreign exchange at sight, while a usance letter of credit can only receive foreign exchange when the bill of exchange expires.

In particular, it should be noted that a fake usance letter of credit is a letter of credit that stipulates that all interest and expenses shall be borne by the importing enterprise, that is, the usance bill shall be paid at sight, and the importing enterprise shall pay the discount fee to the financing bank.

Further Information] Usance Letters of Credit Sight Letters of Credit.

symmetry. When the issuing bank or the paying bank receives the documents from the exporter's bank, although the documents are consistent with the documents, it does not pay the baggage or the payment immediately, but waits until the due date of the usance bill to fulfill the payment commitment. It is a letter of credit based on a transaction contract of document at sight and usance payment, and its characteristics are:"The documents are consistent and the payment is due"。

A fake usance letter of credit is a usance bill issued by the beneficiary, which can be accepted by the bank.

After discounting, the letter of credit for the bill is immediately obtained. The bill of exchange issued by the exporter of such a letter of credit is still a usance bill, but can be discounted through the instrument.

Payment is made immediately and the importer bears the discount costs incurred. The exporter can also earn interest if he is willing to accept the forward payment. For importers, they can get the shipping documents to pick up the goods without having to pay immediately, so that they can get the benefit of deferred payment.

The characteristics of fake usance letters of credit are that the bill of exchange is usance and payment is made at sight; The paying bank agrees to pay at sight, and the discounting fee is borne by the importer. In other words, the exporter issues a usance bill to the importer, but the letter of credit stipulates that the foreign exchange will be collected at sight, and the essence of this practice is that the issuing bank or the paying bank provides the importer with facilities for financing funds, and the interest to be paid is borne by the importer. Fake usance letters of credit are used as a means of payment.

For importers, working capital facilities can be provided by banks, subject to the payment of interest; For the exporter, the bill of exchange can be paid at sight, but it also bears the risk of recourse before the bill of exchange matures.

Symmetry of usance L/C sight L/C. When the issuing bank or the paying bank receives the documents from the exporter's bank, it does not pay immediately, but waits until the maturity date of the usance bill to fulfill the payment commitment. It is a letter of credit based on the transaction contract of sight document and usance payment, which is characterized by the consistency of the document review and the payment when due.

In the practical application of international **, usance letters of credit are roughly divided into the following types: (1) bank acceptance usance letters of credit. The issuing bank is the payer of the usance bill, and once the document is accepted in accordance with the acceptance of the usance bill, it shall bear the responsibility of payment due to the drawer, endorser and holder; (2) Letter of credit accepted by the firm.

The applicant (importer) is the payer of the usance bill. After receiving the documentary draft for review, the issuing bank shall send it to the importer for acceptance after the document is in conformity, and the accepted documentary draft shall still be retained in the issuing bank, and the importer shall pay the redemption order (3) deferred payment letter of credit on the due date of acceptance. The issuing bank stipulates in the terms of the bill of lading that the payment will be made a certain number of days after the bill of lading, or the issuing bank will pay a number of days after seeing the bill, and generally does not require the beneficiary (exporter) to issue a bill of exchange, even if the bill of exchange is submitted, the issuing bank will not accept it, so it is not easy to discount, so the deferred payment letter of credit is also known as the letter of credit without acceptance.

In the contemporary international world, the use of L/C at sight is the mainstay, supplemented by usance L/C, and this is also the case in China.

1. Classification of usance letters of credit.

1) We mainly include letters of acceptance (acceptancel c) and deferred payment letters of credit (deferredpaymentl c).

1. Letter of acceptance can be divided into:

1) Banker's acceptance letter of credit.

(2) Letter of credit accepted by the firm.

The term of the bill after the acceptance of the usance letter of credit is: from the value date of the bill to the date of acceptance and payment.

Interest on usance L/C (amount of bills, interest rate on bills) (value date of acceptance) 360 days.

2. Risk prevention.

In the international **, usance letter of credit is very popular with importers because it is a way for exporters and their banks to finance importers, and customers' demand for usance letters of credit is also increasing. However, due to the long payment time, national risk, credit risk, market conditions and other difficulties under the usance letter of credit, once the bank accepts the bill, then its responsibility will be changed from the unanimous payment responsibility under the document to the unconditional payment responsibility on the bill, which makes the usance letter of credit has a higher risk than the sight letter of credit. It is precisely out of this high-risk consideration that the People's Bank of China issued a special document in 1997 setting out specific requirements for commercial banks to avoid their risks.

1. Exchange risk, especially in the current situation of RMB strengthening against the US dollar. Take acres.

2. The issuing bank goes bankrupt. However, this is rare. The bankruptcy of the issuer does not affect the collection, because the issuer wants to pick up the goods, first of all, he must first accept the bill. The bill of exchange has been accepted, and the issuing bank must pay.

3. Payment Suspension Order. Some unscrupulous businessmen in Greece and Italy are good at this trick. The use of certain provisions of domestic law to make a claim for the quality of goods, pending a court decision, to temporarily suspend payment, is equivalent to domestic "pre-litigation preservation".

1. L/C risk prevention measures.

1. Clarify responsibilities and obligations. In particular, the issuing bank should establish a risk awareness of the primary payment responsibility, and the notifying bank must check the signature or secret deposit after receiving the L/C, so as to determine the authenticity and eliminate the counterfeit L/C. When the beneficiary is inexperienced and does not know how to verify the L/C, the bank will make inquiries to the issuing bank about the delay, incompleteness or other errors in the receipt of the L/C, so as to avoid the soft terms of the L/C.

2. Implement guarantees and mortgages.

To reduce the risk of issuance, the letter of credit applied for by the applicant should be guaranteed and mortgaged as far as possible. However, credit support such as mortgage or guarantee may not necessarily ensure the timely payment of foreign exchange in the letter of credit, it can only reduce the risk, but not eliminate the risk, so the authenticity of the contract, agreement, mortgage and other documents signed by the mortgage and guarantee issuance and the mortgage assets of the enterprise must be strictly reviewed from a legal point of view to ensure that the mortgage and guarantee have legal effect.

3. Choose a bank with good credit standing as a business partner.

The payment of L/C is realized through the international business network between banks, and the good reputation of the banks themselves and the good cooperative relationship between the banks will undoubtedly facilitate the timely transmission of information and facilitate the cooperation between banks to combat L/C fraud.

2. The method of payment by letter of credit.

The payment methods for L/C are:

1. Pay at sight;

2. Forward acceptance;

3. Deferred payment.

Notes on payment of letter of credit:

When the settlement method of L/C payment is adopted, the buyer fills in the application form for L/C issuance according to the sales contract and pays the L/C deposit or other guarantee to the issuing bank, and then asks the issuing bank to issue the L/C.

The letter of credit is issued to the seller in favor of the seller, and once the letter of credit is issued, it becomes an agreement independent of the sales contract. After the seller has shipped the goods in accordance with the contract before the delivery date, and then obtains a set of documents, including the most important loaded bill of lading (b l), and the quantity, date and appearance condition of the goods are consistent with the sales agreement, he can go to the bank (negotiating bank) designated in the letter of credit to apply for foreign exchange settlement.

After the negotiating bank verifies the documents according to the terms of the L/C, it will advance the payment to the beneficiary, and then notify the issuer to pay the redemption bill.

The differences are as follows: 1. Payment term: L/C at sight shall be paid immediately after the issuing bank receives the false documents (generally paid within 5 bank working days); We generally divide usance letters of credit into 30 days, 60 days and 90 days forwards; Taking 30 days as an example, the payment is made on the 30th day after the issuing bank receives the documents.

2. Different definitions: Sight credit refers to a letter of credit in which the beneficiary can collect payment for goods with a documentary bill at sight or only with documents according to the provisions of the letter of credit. It is characterized by the safe and rapid collection of foreign exchange by the beneficiary; A usance letter of credit refers to a letter of credit in which the issuing bank or its designated paying bank does not pay immediately after receiving the usance draft handed over by the beneficiary, but accepts it in advance and waits for the bill of exchange to expire before making payment.

3. Different classifications: L/C at sight can be divided into L/C for single cash and L/C for telegraphic transfer claims; The usance letter of credit can be divided into bank acceptance usance letter of credit and firm acceptance usance letter of credit according to the different acceptors.

Spot credit Hu Ye Kai certificate: The issuing bank receives the documents and pays immediately. (Generally paid within 5 banking days).

Weavance letter of credit: generally 30 days, 60 days, 90 days forward. Taking 30 days as an example, the issuing bank calls for payment on the 30th day after receiving the documents.