{"id":3240,"date":"2018-10-30T15:05:14","date_gmt":"2018-10-30T19:05:14","guid":{"rendered":"http:\/\/www.letterofcredit.biz\/?p=3240"},"modified":"2019-04-06T06:19:49","modified_gmt":"2019-04-06T10:19:49","slug":"at-sight-letter-of-credit","status":"publish","type":"post","link":"https:\/\/www.letterofcredit.biz\/index.php\/2018\/10\/30\/at-sight-letter-of-credit\/","title":{"rendered":"At Sight Letter of Credit"},"content":{"rendered":"

According to the current letters of credit rules, UCP 600<\/a>, credits must state how they are available to beneficiaries in terms of payment type.<\/p>\n

UCP 600<\/a> – Article 6-b states that “A credit must state whether it is available by sight payment, deferred payment, acceptance or negotiation.”<\/p>\n

On this article we explain letters of credit issued available by at sight payment.<\/p>\n

Definition:\u00a0<\/strong><\/span><\/h4>\n

At sight payment is a payment due on demand. At sight letter of credit can be defined as a letter of credit that is payable as soon as the complying documents have been presented to the issuing bank or the confirming bank.<\/p>\n

Payment Time:<\/strong><\/span><\/h4>\n

When should the beneficiary expect to receive the payment from the issuing bank or the confirming bank under an at sight letter of credit?<\/strong><\/p>\n

If is the issuing bank or the confirming bank finds out that the presentation is complying, then they should transmit the funds to the beneficiary at the earliest convenience.<\/p>\n

We know that banks have 5 working days to determine whether a presentation is complying or not.<\/p>\n

As a result, under a complying presentation where no additional reimbursement time-frame has been defined, the beneficiary should expect to receive the letter of credit amount from the issuing or confirming bank between 7-10 days after documents received by these banks.<\/p>\n

Advantages:<\/span><\/strong><\/h4>\n

In which circumstances at sight letter of credit can be preferred?<\/strong><\/p>\n

At sight letter of credit can be used in situations where the beneficiary needs funds as soon as the shipment is completed.<\/p>\n

At sight letters of credit are mostly used in small to medium size transactions where applicant is located in a relatively high risk country.<\/p>\n

Risks:<\/span><\/strong><\/h4>\n

What are the potential risks in at sight letters of credit?<\/strong><\/p>\n

There is no additional risks associated with at sight letters of credit other than ordinary letters of credit possess.<\/p>\n

Swift Usage:<\/strong><\/span><\/h4>\n

At sight letter of credit is shown in a MT700 swift message under field 41a as below,<\/p>\n

MT 700 Issue of a Documentary Credit<\/a>
\nField 41a: Available With … By …<\/a><\/p>\n