Letter of Credit Discounting: How Exporters Obtain Cash Early
How discounting a usance Letter of Credit lets an exporter receive funds before maturity, and what it costs.
Reviewed by LCCheck team (owner-approved) · 2026-10-12
Short answer
Under a usance Letter of Credit, once a bank has accepted a draft or incurred a deferred payment undertaking, the exporter can ask a bank to pay it early, less a discount for the remaining time and risk. UCP 600 Article 12(b) allows a nominated bank to prepay or purchase its own undertaking. Discounting is usually only available after a complying presentation.
| Available for | Usance / deferred payment credits |
|---|---|
| Rule | UCP 600 Art. 12(b) |
| Cost | Discount rate × time to maturity + fees |
How it works
- Present compliant documents.
- Bank accepts or undertakes to pay at maturity.
- Exporter asks for early payment.
- Bank pays the discounted amount now.
Check
- With or without recourse to you.
- Discount rate and fees.
- Whether the credit is confirmed — affects price.
Sources
General guidance, not legal advice. Your bank examines documents independently.
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