Resources · Commercial
TT vs Sight LC vs Usance LC: an honest comparison.
Payment structure is a risk-and-cash-flow decision, not a formality. The three working instruments, with the trade-offs stated plainly.
Instrument
Bank involvement
Buyer cash timing
Cost
Fits when
TT structureadvance + balance
Transfers only, no issuance
Advance at contract · balance vs documents
Bank transfer fees
Straightforward, repeat trades; both sides comfortable
Sight LCUCP 600
Buyer's bank issues; pays on compliant documents
At document presentation
Issuing bank's schedule
First trades · larger tickets · bank comfort wanted
Usance LCdeferred
As Sight LC, payment at agreed tenor
After the tenor, often post-arrival
LC cost + tenor financing
Payment needs to match resale or milestones
How to think about it
- The document set is identical under every instrument, invoice, packing list, certificate of origin, bill of lading, inspection record. The instrument changes who pays whom when, not what travels.
- LC discipline is document discipline. Banks pay on compliant documents; a set that matches the LC text exactly is the whole game.
- Credit-supported terms exist for working-capital-constrained buyers via independent partners, underwritten by the lender, on the lender's terms, subject to approval.
The desk states the available structure in every quotation, see payment structures for the full set, including D/P collection and credit-supported terms.
Put it to work
Instrument in mind? State it in the RFQ.
Send the drawing, datasheet or bill of materials with quantity, destination and timing, the desk reviews the requirement and returns with manufacturing options and structure.