LC Payment Terms and Conditions

 There are certain LC payment terms that must be fulfilled when the letter of credit is issued. The LC terms are:

  • Beneficiary/exporter and the issuing bank who has undertaken the obligation to make the payment should confirm the letter of credit.
  • There must be a clear mention of the due date by when the beneficiary/exporter shall receive the payment from a bank issuing the LC.
  • The letter of guarantee commitment should clearly specify the percentage or the amount of risk associated with the confirmed letter of credit issued by the bank.
  • The letter of guarantee commitment relating to guarantee issued should be precise and clear.
  • The export agreement should be properly drafted covering all the relevant information.

LC at Sight Payment

Letter of credit at sight payment is among the fastest modes of payment for the sellers.

Under LC at sight payment, the seller/exporter receives the payment within 7 to 10 days on fulfilling the conditions of the letter of credit. Like LC at sight payment, there are various other types of LC.

LC at Sight Payment Terms

In order to get the payment quickly, the seller/exporter needs to submit the required documents to the bank. Apart from a letter of credit, he is required to submit all the documents that prove he has met his obligations. Like for example, he must submit the documentary proof for shipped goods i.e. bill of lading. The bank reviews the documents submitted and verify its authenticity.


Letter of credit has great significance for the seller/exporter. Whenever the seller or exporter is in urgent need of money and buyer is unable to pay, then the LC can be used to get the payment from the bank. LC at sight payment provides immediate payment after fulfillment of certain conditions by the exporter/seller. Utmost care should be taken while fulfilling the terms of LC, otherwise, it could lead to rejection of payment by the bank.


Last updated on : March 16th, 2018
What’s your view on this? Share it in comments below.

About The Author

Sanjay Bulaki Borad
Sanjay Bulaki Borad

Sanjay Borad is the founder & CEO of He is passionate about keeping and making things simple and easy. Running this blog since 2009 and trying to explain "Financial Management Concepts in Layman's Terms".

Leave a Reply

Hire Purchase Agreement / Contract
  • Rights Issue of Shares
    Rights Issue of Shares
  • Capital Employed
    Capital Employed
  • Back to back LC
    Back-To-Back Letter Of Credit
  • Ways to Redeem Debentures – Lump Sum Payment, Installments, Open Market Purchase, Conversion to Shares, Call Option and Put Option
    Ways to Redeem Debentures
  • Subscribe to Blog via Email

    Enter your email address to subscribe to this blog and receive notifications of new posts by email.

    Recent Posts

    Find us on Facebook

    Related pages

    define discounted cash flowbalance meaning in hindidefine macroenvironmentdays sales in receivables ratio formulaaccount payable journal entriesdistinguish between operating income and net incomeexample of decoupling inventorybills receivable journal entrycapital structure waccwalters management paymentcvp analysis break even pointdebit in hindidebits and creditcapitalizing an expensedefinition accountancyhypothecatebills of lading typesifrs impairment of assetsfunds flow analysishow to calculate trade discountdebtors turnover ratio definitiontrade credit advantages and disadvantagesadvantages of operating leaseincremental defdisadvantage of break even analysistrade credit advantagessimple mortgage and equitable mortgagewacc curvelease financing pptworking capital sales ratioadr currencyadvantages and disadvantages of venture capitaldebtor aginghow to calculate noiwhat is the meaning of factoringdefinition of capital rationingdividend valuation model advantages and disadvantagesconstant growth stock definitionregular payback periodcalculation of profitability indexadvantages and disadvantages of npvwhat is the definition of overdraftwhat is the first step in budgetingadvantages of profit maximizationstock purchase vs asset purchase advantages and disadvantagestrade credit short term financingmodified irr calculatorpayback period formula for uneven cash flowrevolving standby letter of creditgaap accounting rules for capitalizing costscredits and debits in accounting explainedlessor accounting for finance leasescalculate accounts receivable turnoververtical common size income statementcomputing yield to maturityinternal and external financingassets turnover formulawhat is an example of a vertical mergertimes interest earned ratio definitionlessor and lessee agreementdisadvantages of budgetingsimple irr calculatorcash flow coverage ratio exampleconcept of factoringdebts to assets ratio formulainterest adalahlc at sight paymentdefine accelerated depreciationzero balance budgetingcfa level 1 portfolio managementunderstanding debits and credits accountingstrategic motives for mergers and acquisitionsroce definitionworking capital financing pptmerger and consolidation definitionpotential problems and limitations of financial ratio analysiscapitalization of r&ddisadvantages of financial ratio analysisflexible firm model advantages and disadvantagesnpm ratio