Deferred Payment LC MT700: How Importers Can Arrange Supplier Payment Terms Through a Well-Rated Bank

When a supplier refuses open account terms but full advance payment would hurt your cash position, a deferred payment Letter of Credit can become the right trade finance instrument.

A Deferred Payment Documentary Letter of Credit, usually issued by SWIFT MT700, gives the supplier a bank-backed payment undertaking while allowing the buyer to pay at a future maturity date. For importers, distributors, commodity buyers, and trading companies, this can solve a painful problem: the supplier wants payment security, while the buyer needs working capital headroom.

This is not theory. If you are searching for terms like “deferred payment LC MT700 quote,” “usance LC from rated bank,” “DLC for commodity imports,” “bank issued deferred payment letter of credit,” or “supplier wants LC instead of advance payment,” you probably already have a transaction that needs to move.

What Is a Deferred Payment LC MT700?

A deferred payment LC is a documentary credit where the issuing bank undertakes to pay the beneficiary at a future date, provided the beneficiary presents compliant documents under the LC terms.

The MT700 is the SWIFT message type used by the issuing bank to transmit the documentary credit to the advising bank.

The LC may be available by deferred payment, meaning the beneficiary is not paid immediately at sight. Payment is made at the agreed maturity date, which may be calculated from shipment date, bill of lading date, invoice date, document presentation date, or another trigger defined in the LC wording.

Common deferred payment tenors include 30, 60, 90, 120, 180, or 360 days.

Why Would an Importer Use a Deferred Payment LC?

The most common reason is cash flow.

A supplier may say: “We need payment security before we ship.”

The buyer may say: “We can pay, but not 100% upfront before receiving and reselling the goods.”

A deferred payment LC bridges that gap. The supplier receives comfort from a bank undertaking. The buyer receives time to sell inventory, process goods, collect receivables, or arrange downstream financing before the payment date.

This structure is especially relevant for commodity imports, raw materials, food products, metals, agricultural goods, machinery, energy products, industrial inputs, and fast-moving inventory trades.

Deferred Payment LC vs Sight LC

A sight LC is payable when compliant documents are presented.

A deferred payment LC is payable at a future maturity date after compliant document presentation.

That distinction matters. A sight LC mainly protects the supplier. A deferred payment LC protects the supplier while giving the buyer a working capital benefit.

For example, if an importer buys USD 5 million of agricultural commodities under a 180-day deferred payment LC, the supplier has bank-backed payment comfort, while the buyer has 180 days to convert the goods into cash before maturity.

Is a Deferred Payment LC the Same as a Usance LC?

They are closely related.

A usance LC generally refers to a letter of credit payable at a future date. A deferred payment LC is a form of usance documentary credit where payment is deferred according to the LC terms.

In some transactions, the structure may be called a usance LC, deferred payment DLC, acceptance credit, or payable-at-usance LC. The exact language matters because the bank, beneficiary, and advising bank must agree on how payment is triggered, when maturity starts, and which documents must be presented.

Can the Supplier Discount a Deferred Payment LC?

Sometimes, yes.

A supplier may ask whether the deferred payment LC can be discounted, negotiated, or forfaited after compliant presentation. This depends on the issuing bank, confirming bank, advising bank, beneficiary bank, LC wording, country risk, tenor, and whether the LC is confirmed.

If the LC is confirmed by a strong confirming bank, the beneficiary may have a better chance of obtaining early payment through LC discounting. Without confirmation, discounting may still be possible, but pricing and availability depend heavily on the issuing bank’s credit standing.

This is a key question suppliers often ask: “Can I get paid earlier even though the LC is deferred?”

The answer is: potentially, but the structure must be prepared correctly from the start.

Does the LC Need Confirmation?

Not always, but it may help.

A confirmed LC means a confirming bank adds its own undertaking to pay, in addition to the issuing bank. Suppliers often request confirmation when they are uncomfortable with issuing bank risk, buyer country risk, or political risk.

For buyers, confirmation can make the transaction more expensive. For suppliers, it can make the LC more acceptable and potentially more financeable.

If your supplier is asking for “LC from a top bank,” “confirmed LC,” or “acceptable issuing bank,” the bank rating and confirmation mechanics need to be discussed before the LC is issued.

What Documents Are Usually Required?

A serious deferred payment LC quote needs more than a simple email.

Banks and arrangers will usually ask for:

• Buyer company documents
• Shareholder and director information
• Recent financial statements or management accounts
• Bank statements
• Supplier name and country
• Pro forma invoice or sales contract
• Goods description and HS code
• Incoterms
• Shipment route
• Latest shipment date
• LC amount and currency
• Requested tenor
• Draft LC wording, if available
• Beneficiary bank details
• Inspection terms
• Repayment source
• Available collateral, cash margin, or credit line

The cleaner the file, the faster the request can be assessed.

What Does the Issuing Bank Review?

A well-rated issuing bank reviews the applicant, transaction, and repayment risk.

That includes KYC, AML, sanctions screening, beneficial ownership, country risk, goods risk, supplier legitimacy, transaction value, tenor, cash margin, collateral, account history, and repayment capacity.

The bank also reviews documentary terms, including commercial invoice, packing list, bill of lading, certificate of origin, inspection certificate, insurance document, transport document, and presentation period.

If the LC wording is too vague or unrealistic, the supplier may reject it. If the documents are too strict, the supplier may face discrepancies. If the repayment logic is weak, the bank may refuse to issue.

Can You Get a Deferred Payment LC Without Cash Margin?

Sometimes, but only if the buyer has sufficient credit standing or an approved trade finance line.

Many applicants need cash margin, collateral, a credit facility, pledged receivables, inventory support, a corporate guarantee, or other bank-acceptable security.

A deferred payment LC creates exposure for the issuing bank. If compliant documents are presented, the bank may need to pay at maturity. The bank will want comfort that the applicant can reimburse it.

No collateral, no repayment source, no financials, and no real transaction usually means no serious quote.

What Is the Difference Between Deferred Payment LC and UPAS LC?

A UPAS LC, or Usance Payable At Sight LC, allows the supplier to receive payment at sight while the buyer repays the bank at a future date. In that structure, the financing cost is usually borne by the buyer.

A standard deferred payment LC may pay the beneficiary only at maturity unless it is discounted, negotiated, or otherwise financed.

Buyers should clarify whether the supplier needs payment at maturity, payment at sight under UPAS terms, or a deferred LC that can be discounted after compliant presentation.

That distinction affects pricing, bank appetite, wording, and supplier acceptance.

When Should You Request a Quote?

You should request a deferred payment LC quote when you already know the transaction details.

A strong quote request includes the buyer country, supplier country, goods, amount, currency, tenor, shipment route, Incoterms, collateral available, repayment source, and whether confirmation or discounting is required.

A weak request says: “I need a DLC from a rated bank.”

A strong request says: “We need a USD 3.5 million deferred payment LC MT700 for 180 days for copper cathode imports, with supplier in Zambia, buyer in Europe, shipment by sea, SGS inspection, 25% cash margin available, and repayment from resale contracts.”

That is the difference between noise and a bankable request.

What This Structure Is Not

A deferred payment LC is not proof of funds. It is not a leased instrument. It is not a monetization tool. It is not a way to create liquidity from fake bank paper.

It is a documentary trade payment instrument tied to real goods, real counterparties, real shipping documents, and real bank underwriting.

If there is no supplier, no contract, no shipment, no repayment source, and no collateral, there is no serious transaction to quote.

Request a Quote for Deferred Payment LC MT700 Arrangement

Financely helps eligible importers, commodity buyers, distributors, and trading companies arrange deferred payment LC MT700 structures through well-rated issuing bank channels.

The quote depends on the buyer profile, supplier, goods, jurisdiction, tenor, collateral, LC wording, confirmation requirements, and bank appetite.

If your supplier requires bank-backed payment assurance and you need deferred settlement, request a quote based on the real transaction details.