Green Clause Letter of Credit: Warehouse-Supported Advances
How a green clause Letter of Credit allows advances against goods stored in a warehouse before shipment.
Reviewed by LCCheck team (owner-approved) · 2026-10-12
Short answer
A green clause Letter of Credit is a variant of the red clause: the beneficiary can draw an advance before shipment, but must also present evidence that the goods are stored in a warehouse, often in the bank's or applicant's name. That gives the buyer more security than a red clause.
| Advance | Before shipment |
|---|---|
| Against | Warehouse receipt + undertaking |
| Security | Higher than red clause |
How it works
- Seller stores goods in an approved warehouse.
- Presents warehouse receipt to draw the advance.
- Ships and presents full documents later.
- Advance deducted from final payment.
Check
- Approved warehouse and receipt form.
- Insurance of stored goods.
- Advance percentage.
Sources
General guidance, not legal advice. Your bank examines documents independently.
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