Quick answer
Sight LC = payable at (or shortly after) compliant presentation.
Usance / deferred payment LC = payable at a later date after compliant presentation (e.g., 30/60/90 days).
Both are document-driven; the difference is when cash is released.
The operator-level difference (what changes in real life)
| Topic | Sight LC | Usance (deferred) LC |
|---|---|---|
| Cash timing | faster receipt | later receipt |
| Working capital | lower financing need | higher financing need |
| Document pressure | high | high (same exam standards) |
| Buyer preference | less credit | more credit time |
| Seller preference | faster cash | may accept for better pricing/volume |
When to choose a sight LC
Choose sight when:
- you want to minimize payment delay risk,
- you’re protecting cash flow on a large deal, or
- you don’t want to run additional financing layers.
When to choose a usance (deferred payment) LC
Choose usance when:
- the buyer needs credit time,
- the economics justify it (price/volume), and
- you have a clear plan for working capital (internal cash or financing).
Critical warning: usance does not reduce discrepancy risk
Teams sometimes assume “usance is more flexible”. It isn’t.
The bank still examines documents for compliance. Discrepancies still delay payment — you just also have deferred timing on top.
If discrepancies are your recurring issue, fix the workflow first:
What to check in the LC text
- “Available by”: payment / acceptance / deferred payment
- Tenor wording: e.g., “30 days after bill of lading date” vs “30 days after sight”
- Whether discounting/negotiation is allowed (bank-specific)
- Deadlines: latest shipment date, expiry, presentation period
How Tijara helps
Tijara helps teams track LC type, deadlines, and document sets against the deal so you can model cash timing and prevent avoidable delays.