D-1-2-5- The documentary credit with deferred payment


Payment processing is one of the main preoccupations of companies with international transactions. Doing business is important, but compensation is essential. Esandis offers you free training space dedicated to international transactions, and all the skills you need to become an export or import manager. Our objective is to provide you an understanding of the importance of the payment component of an international transaction.

The documentary credit is one of these payment techniques.

1-2-5-1- The documentary credit : reminder

A documentary credit is therefore a payment technique and it is universally used within the scope of international transactions. It is one of the most secure payment techniques. This technique involves the respective importer and exporter banks. They become the guarantors of the transactions, permitting the exchange of the documents against the payment of the goods.

The documentary credit is a payment technique with rules and Uniform Customs and practices, UCP 600, that were published by the ICC, International Chamber of commerce, in 1998.

We should mention that the two most-often used documentary credits are the irrevocable documentary credit and the irrevocable and confirmed documentary credit.



1-2-5-2- The documentary credit with deferred payment : definition

The embodiment of a documentary credit with deferred payment is a payment at the due date in accordance with implications within the documentary credit and its payment at the designated bank. The documentary credit with defered payment can be:
  • a documentary credit deferred and notified
    When a documentary credit is notified, the designated bank can defer to the issuing bank's coverage to provide payment to the recipient when due.

  • or a documentary credit with deferred and confirmed payment
    When the documentary credit is confirmed, the bank agrees to pay at the due date, without defering to the issuing bank's coverage