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Deferred Payment Letters of Credit and Drafts
A Letter of Credit will state whether it is available by sight payment, deferred payment, acceptance or negotiation. The term deferred payment refers to payment scheduled a specific number of days after shipment, as opposed to payment made immediately or "at sight." Under a deferred payment L/C, the creditor will be paid a pre-determined number of days after shipment and presentation of the required documents. A distinction is drawn between a Letter of Credit that is available for deferred payment and one that is available for acceptance of time drafts in that no drafts are involved under a deferred payment Letter of Credit. Without accepted drafts, the beneficiaries ability to sell or "discount," meaning its right to payment to a lender or investor, is restricted.
Edited by Michael Zininberg & Michael Dennis. Mr. Zininberg has several years of experience monitoring, managing and collecting from both domestic and international accounts. His email address is mzininberg@gmail.com