Usance Payment at Sight (UPAS) LC Financing and Re-financing)

Trade Finance & Refinance Experts

Usance Payable at Sight (UPAS) / Suppliers credit

Usance credit payable at sight is a structure where the Letter of Credit issued by the Importer’s bank is a Usance LC and contains clauses that allow the exporter to get paid immediately through a financing bank while the importer pays after the end of the usance period, thus availing credit period. Under the UPAS structure, associated expenses including draft acceptance charge, discounting interest, and service charge are paid by the importer (LC applicant).

Suppliers Credit / LC discounting structure is conceptually similar to UPAS except that in these classic structures, the associated expenses including draft acceptance charge, discounting interest, and service charges are paid by the exporter (LC beneficiary).

Letter of Credit confirmation and discounting

Letter of Credit (LC) confirmation is a guarantee provided by a second bank for the payment risk of the LC issuing bank. LC confirmation may be required if the exporter is not comfortable with the credit risk or country risk of the LC issuing bank. Sometimes LC confirmation might be required by the LC negotiating bank before negotiating the Letter of Credit or by the LC issuing bank in case the bank risk of the Master LC issuing bank is unacceptable.

Reimbursement authorization structure

A Reimbursement Bank is a bank that has been authorized by the issuing bank to provide reimbursement to the exporters' bank (claiming bank) by accepting and paying a time draft drawn on the reimbursing bank.

The Reimbursement Authorisation (RA) structure is similar to UPAS/ Supplier’s credit where the importer gets a credit period and the exporter gets paid at sight, however, the two structures are different when it comes to process and document flow.

While the UPAS structure requires the LC documents to be routed through the financing bank, the RA structure does not require the LC and trade documents to be routed through the reimbursement bank. Instead, the acceptance for LC and copies of other documents are sent to the reimbursement bank by the issuing bank through the Swift network. This gives additional flexibility to get a Reimbursement bank anywhere in the world as original trade documents are not routed through it.

Foreign guarantee issuance against local counter-guarantee

A bank guarantee is a promise by the bank to cover the loss if their customer defaults on their promise to pay or perform as per contract. A bank guarantee can be of various types such as advance payment guarantee, performance guarantee, retention guarantee, etc.

An advance payment guarantee is typically used when an importer has paid in advance for the delivery of goods at a later date. This guarantee is used to protect an advance payment in case of failure by the exporter to deliver the goods as per the contract.

A performance guarantee can be invoked by an importer in case an exporter of goods/services fails to meet the requirements of the contract e.g. meet milestones.

In the scenario where the beneficiary is not satisfied with the bank that has issued the above-mentioned guarantees, they seek a counter-guarantee from a bank that they are comfortable with. The bank issuing the counter-guarantee is typically from the country of the beneficiary.

Forfaiting

Forfaiting enables exporters to receive funding by assigning their trade-related receivables secured with trade finance instruments such as a Letter of Credit to a financial institution at a discount. Forfaiting enables the exporter to accelerate cash flow by selling their receivables on a non-recourse basis.

Standby Letter of Credit (SBLC) discounting.

A Standby Letter of Credit (SBLC) is issued by a bank guaranteeing payment on behalf of the LC applicant (buyer) in case they fail to fulfill a contractual commitment with the LC beneficiary (seller). Buyers' credit can be availed against an SBLC as the underlying security.

Our Service:

1) Confirmation and financing of UPAS LC

2) UPAS LC Financing.

3) LC Refinancing.

4) Project Finance.

5) Stand By Letter of Credit

6) Bank Guarantee.

Glad to inform you that JD & Co has a global network of more than 60 trade specialists in Banks/FI to support your trade financing needs. JD & Co's dedicated customer services team provides support for your trade service needs. Our global trade advisory team can help you structure transactions and minimize operational risks. JD & Co can provide a very competitive offer rate for all types of LC financing and refinancing transactions.