At Sight vs Usance Letter of Credit: Examples and Payment Timelines
Sight vs usance Letters of Credit compared: when the seller is paid, who carries the risk, how the MT700 shows it, and worked payment timelines.
3 min readUpdated 2026-10-13Written by LCCheck team
Short answer
A sight Letter of Credit pays the seller once the bank finds the documents compliant, usually within five banking days of presentation. A usance (or deferred payment) credit pays on a later fixed date, such as 90 days after the bill of lading date. Sight favours the seller's cash flow; usance gives the buyer time to sell the goods before paying.
In this guide
| Sight payment | After compliant presentation |
|---|---|
| Usance payment | Fixed date later, e.g. 60 or 90 days |
| Bank examination time | Up to 5 banking days (UCP 600) |
| Where it shows | MT700 fields 41a and 42C or 42P |
Side-by-side
| Sight | Usance / deferred payment | |
|---|---|---|
| When paid | On compliant presentation | On a maturity date after presentation or shipment |
| MT700 41a | BY PAYMENT or BY NEGOTIATION at sight | BY ACCEPTANCE or BY DEF PAYMENT |
| Draft (42C) | AT SIGHT, if a draft is required | e.g. 90 DAYS AFTER B/L DATE |
| Buyer's cash flow | Pays early | Pays later, often after reselling |
| Seller's risk | Short exposure | Exposure to the bank until maturity |
| Early cash for seller | Not needed | Possible by discounting the accepted draft |
Payment timelines worked through
Take a fictional shipment on 2 March, with documents presented on 9 March. Under a sight credit, the nominated bank has up to five banking days after presentation to examine the documents. If they comply, payment follows — in practice, around mid-March, plus transfer time. See five banking days.
Under a usance credit for 90 days after the bill of lading date, maturity is 31 May, counted from 2 March. The bank still examines the documents in March. If they comply, it accepts the draft or gives a deferred payment undertaking, and pays on 31 May. If the tenor were 90 days after sight, the count would start from the day the bank receives the documents instead.
Discrepancies hurt both types
Whichever type you have, payment depends on compliant documents. A discrepancy turns a sight credit into a wait for the buyer's waiver, and under a usance credit it can mean no bank undertaking at all until the buyer accepts. Checking documents before presentation matters just as much. See common discrepancies and the interactive LC example.
Getting cash early under a usance credit
Once the bank has accepted a draft or given its deferred payment undertaking, the seller can often ask the nominated or confirming bank to discount it — receive the amount now minus interest and a fee. The cost depends on the bank, the tenor and the issuing bank's risk. Estimate it alongside other charges with the LC cost calculator, and read letter of credit costs.
Which to ask for
Sellers should ask for sight when cash flow matters or the buyer is new. Buyers ask for usance when they need time to sell the goods. A common compromise is a usance credit confirmed by a bank in the seller's country, which the seller can discount. Agree the tenor and how it is counted in the sales contract so the draft credit can be checked against it. Read the full guides to sight credits and usance credits, and the wider LC payment terms.
Questions
Is a usance LC riskier for the seller?
The seller waits longer, so it carries the issuing bank's risk for longer. Once a bank has accepted the draft or given a deferred payment undertaking, that bank is bound to pay at maturity, and confirmation by a bank the seller trusts reduces the risk further.
Does 'at sight' mean the same day?
No. At sight means payment once documents are found compliant. Banks may take up to five banking days to examine documents, and the transfer itself takes extra time.
Can the tenor be changed after issuance?
Only by an amendment that the issuing bank issues and the beneficiary accepts, and the confirming bank too if there is one. Agree the tenor in the contract to avoid this.
What is a deferred payment credit?
A usance credit that pays on a set date without a draft. The bank gives a deferred payment undertaking instead of accepting a bill of exchange. In practice the timeline works the same way as an acceptance credit.
Which type does the buyer pay more for?
Fees depend on the bank. A usance credit usually keeps the issuing bank's commitment open longer, which can increase issuance commission, and discounting interest is often for the seller's account unless the contract says otherwise.
Sources
- ICC — UCP 600, Uniform Customs and Practice for Documentary Credits
- ICC Academy — trade finance learning
- US International Trade Administration — Letters of Credit
General guidance, not legal advice. Rules are explained in our own words; read the official ICC and Swift texts for exact wording. Your bank examines documents independently.
Related guides
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