Sight L/C

A sight L/C (Sight Letter of Credit) refers to a letter of credit under which the beneficiary (exporter), after submitting documents that comply with the L/C terms, is paid immediately by the issuing bank or paying bank (usually within 5 business days after receipt of documents). Its core feature is "payment upon presentation of documents," without the need to wait for the maturity of a draft as under a usance L/C. Use cases: commonly used when the exporter wishes to recover funds quickly, avoid exchange rate risk, or when the importer has good credit standing. Precautions: ① Documents must strictly comply with the L/C requirements; otherwise, payment may be refused; ② Attention must be paid to the L/C expiry date and the period for presentation to avoid overdue presentation; ③ Bank charges are usually borne by the applicant, but this must be clearly specified; ④ The main difference from a usance L/C is the time of payment: under a sight L/C, payment is made immediately after presentation, while under a usance L/C, payment is made on an agreed future date. Therefore, a sight L/C is more favorable to the exporter, but the importer may request a price reduction as compensation. In addition, unlike a "sight payment L/C," the latter does not require a draft, whereas a Sight L/C may require a sight draft.