Usance L/C
Category: Payments
Definition (plain English)
A usance LC pays at a future maturity date after complying documents are accepted, such as 30, 60, or 90 days after sight or shipment.
Why it matters commercially
It gives the buyer credit while providing stronger bank-controlled payment structure than open account, but it shifts financing cost and timing into the deal.
Example
A buyer negotiated a 60-day usance LC so goods could be sold before cash left the business, while the supplier priced the bank and financing cost into the offer.
Common mistake
Comparing usance LC terms to TT or open account without adding bank fees, discounting cost, maturity date, and document-discrepancy risk.
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