Document background
The Deferred LC is a crucial trade finance instrument used when buyers require extended payment terms while ensuring sellers receive bank-backed payment security. This document type is particularly relevant in U.S.-based international trade transactions where the timing of payment is a critical factor. It details the conditions for document presentation, examination criteria, and specific payment terms, typically ranging from 30 to 180 days after document presentation or shipment date. The document must comply with U.S. banking regulations, UCC Article 5, and typically incorporates UCP 600 rules. It's commonly used in large-scale international trade transactions, especially in sectors with longer cash conversion cycles or where suppliers require bank-backed payment assurance while accommodating buyers' working capital needs.
