Usance Letter of Credit: Deferred Payment Explained
How a usance (deferred payment or acceptance) Letter of Credit works and when the exporter is paid.
Reviewed by LCCheck team (owner-approved) · 2026-10-12
Short answer
A usance Letter of Credit pays at a future date after compliant presentation — for example 90 days after the bill of lading date. It is available by deferred payment (bank undertakes to pay at maturity) or by acceptance (bank accepts a draft payable at maturity). It gives the buyer credit time while the seller keeps a bank's payment undertaking.
| Payment | At maturity, e.g. 90 days after shipment |
|---|---|
| Forms | Deferred payment or acceptance (Art. 7) |
| Seller funding | Early payment may be possible by discounting, at a cost |
How maturity is set
- From shipment date (e.g. 60 days after B/L date).
- From presentation or sight.
- On a fixed date.
Watch for
- Maturity calculation from the right document date.
- Discounting cost if you need cash earlier.
Sources
- ICC — UCP 600 (Uniform Customs and Practice for Documentary Credits)
- Swift — MT700 Issue of a Documentary Credit (category 7 standards)
General guidance, not legal advice. Your bank examines documents independently.
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