Usance Credit Payable at Sight

Product Introduction

Usance credit payable at sight refers to an L/C of which the clauses indicate that it is a usance acceptance L/C and that it is a forward draft that requires the letter-issuing bank to be the payer, and stipulate that the letter-issuing bank pays the seller (exporter) on demand or before the acceptance is due, and that such expenses as the draft acceptance charge, discounting interest and service charge are paid by the buyer (importer).

Product Features

1.      Drafts under the L/C category are forward drafts.

2.      Payment on demand is stipulated for the letter of credit.

3.      The acceptance charge and discount charge of the draft shall be paid by the letter applicant.

Service Object

Import enterprises that have registered at the relevant Administration of Industry and Commerce in China, having an independent legal person qualification and a good credit standing. Both the import and export parties agree to settle their trade by means of L/C. The customer hopes to get preferential import goods prices via the demand payment condition, and to get a low cost fund financed from the bank to boot enterprise fund turnover.

Business Advantages

1.      For the Importer

(1)     By financing from our bank, the customer can, based on the demand payment condition, get commercial discounts offered by the exporter, so that the price of imported goods is lower than the one when a usance L/C is adopted.

(2)     The goods payment by means of forward L/C on demand is usually smaller than the goods payment by means of usance L/C, which legally reduces the expenses on taxes such as custom tax and value added tax.

(3)     Financing by means of forward L/C on demand is a voucher business, conducive to improving the debt structure of the customer¡¯s debt table.

(4)     Forward L/C on demand uses standard trade vouchers as its payment criteria, which ensures the safety of the customer¡¯s fund.

(5)     It replaces commercial credit with bank credit, which boosts the market competition power of the customer as the buyer, so that the customer can get ideal favorable price.

(6)     It enables the customer to get a fund financed from the bank at a discount cost, which greatly reduces financial costs and boosts the competitive power of the enterprise, as compared with such financing manners as current capital loan with a high interest, as well as import bill advance.

(7)     Its financing term is much longer than that of the usance L/C, so it is suitable for trades with a relatively longer fund payback time.

2.      For the Exporter

(1)     The payment manner of sight L/C is conducive to ensuring that the exporter receives the proceeds safely under the condition that the vouchers are conforming and consistent.

(2)     It enables the exporter to receive the proceeds on demand by submitting the vouchers at the time of goods shipping, which is conducive for the exporter to improve his/her financial conditions, and to arrange funds for production and trade in a timely fashion.

(3)     The customer can utilized the fund or credit granted by the bank to reduce the own pressure of funds, speed up capital turnover and gain more profits.

Business Process

1.      Customer consigns CGB to open a usance credit payable at sight, and agree the discounting interest rate with CGB;

2.      CGB opens the usance credit payable at sight;

3.      The beneficiary delivers the goods and submits the documents as set out in the L/C;

4.      CGB checks and reviews the documents, accepts and hornors the bills and makes the payment at sight (or prior to the due acceptance date);

5.      Customer accepts to redeem the documents, and pay the amounts under the L/C and CGB¡¯s discounting interest on the due acceptance date.