Deferred Payment DLC (MT700) Arrangement for Importers and Traders
A deferred payment DLC arranged by MT700 gives importers and traders 90 to 180 days to pay, while the supplier holds a bank's undertaking from day one. Financely structures the credit and places it with an issuing bank your supplier will accept.
You sell the goods before the payment falls due. Your supplier ships against a bank promise rather than your balance sheet. We are an advisor and arranger, not a bank.
See your payment timeline
Illustrative. Maturity is usually counted from the bill of lading date or presentation, as set in the LC.
What we arrange
- LC structure and MT700 terms, set as available by deferred payment with the tenor in field 42P. See how MT700 fields work.
- Issuing bank placement, including options to reduce cash margin through credit enhancement.
- Supplier payment options, from discounting under UCP 600 to a UPAS structure that pays the supplier at sight.
- Confirmation by a second bank when your supplier asks for it.
Who it is for
Importers, distributors and commodity traders whose suppliers want a bank-backed LC but whose own cash cycle needs time to sell the goods before paying. For sight LCs see our documentary letter of credit services, and for commodity cargoes our MT700 issuance for commodity importers.
Need supplier terms backed by a bank?
Send the contract, amount, tenor, supplier and your bank details. We will set out the issuing bank, margin, deferred or UPAS structure and costs.
Frequently asked questions
What is a deferred payment letter of credit?
A documentary LC where the issuing bank undertakes to pay the seller at a future date, such as 90 or 180 days after the bill of lading date, instead of at sight. It is issued by SWIFT MT700 as available by deferred payment, with the payment terms set out in field 42P, and no draft is drawn.
How is it different from an acceptance or usance LC?
An acceptance LC uses a time draft that the bank accepts. A deferred payment LC carries the same deferred undertaking without a draft. Under UCP 600 both are ways a bank honours a credit at a later date.
Can the supplier get paid before maturity?
Yes. Under UCP 600 Article 12(b), a bank nominated to incur a deferred payment undertaking is authorised to prepay or purchase it, so the supplier can discount the proceeds. In a UPAS structure, the supplier is paid at sight while you keep the deferred terms.
Who pays the interest on early payment?
It depends on the structure. In standard discounting the supplier bears the discount. In a UPAS LC, the importer usually bears the interest cost for the deferred period.
Does Financely issue the LC?
No. Financely is an advisor and arranger, not a bank. We structure the deferred payment LC and place it with issuing and confirming banks that issue under their own approval.
This article is for general information only and does not constitute legal, tax or investment advice. Financely is an advisory and arranging firm, not a bank, lender or broker-dealer. Any financing is subject to the financing counterparty's underwriting, due diligence, credit approval and documentation.