Sight Letter of Credit is a type of Letter of Credit where payment is made to the seller immediately upon presentation and verification of required documents.
How It Works:
- Buyer arranges a Letter of Credit through a bank.
- Seller ships goods and submits documents.
- The bank verifies compliance.
- Payment is released immediately upon approval.
Benefits:
- Ensures immediate liquidity for exporters upon shipment completion
- Minimizes credit risk and payment delays
- Strengthens trust in international transactions
- Enhances cash flow predictability for sellers
Example:
An exporter receives payment immediately after submitting compliant documents under a sight Letter of Credit.