How to Arrange a UPAS LC so the Seller Gets Cash at Sight and You Get Terms

How to Arrange a UPAS LC so the Seller Gets Cash at Sight and You Get Terms

How to Arrange a UPAS LC so the Seller Gets Cash at Sight and You Get Terms

UPAS stands for Usance Payable at Sight. The seller gets paid at sight against compliant documents. You, the applicant, repay at tenor, usually 60 to 180 days. The trick is clean wording, a confirming or nominated bank that will discount, and fee splits that everyone accepts before shipment.

Outcome: a UCP 600 LC that pays the beneficiary at sight while the applicant settles at maturity, with confirmation and discounting arranged upfront and reimbursement locked in.

When UPAS Is the Right Move

Supplier wants cash at sight
They will not wait for your payment terms, but they will accept a confirmed LC with discounting.
You need tenor on working capital
Match repayment to your receipt of goods and sales cycle without starving operations.
Issuer or country risk exists
Add confirmation so the seller trusts the payout and the nominated bank discounts at sight.
FX exposure at maturity
UPAS lets you hedge one date instead of juggling sight flows and open exposure.

Who Does What Under UPAS

Party Role
Issuing Bank Issues LC under UCP 600 with usance tenor, undertakes to reimburse the nominated or confirming bank at maturity.
Confirming or Nominated Bank Adds confirmation if required, pays beneficiary at sight by discounting, then claims reimbursement at maturity.
Advising Bank Authenticates and advises the LC to the seller. May also act as confirmer.
Applicant Pays issuance and discount costs as agreed. Settles the usance amount at maturity.
Beneficiary Ships and presents compliant documents to get paid at sight.

How to Set Up a UPAS LC Step by Step

Stage What happens Tips that save time
1) Intake Collect SPA or PO, shipment plan, seller’s advising bank, target tenor, and issuer or confirmer acceptability list. Get the seller to confirm in writing that UPAS and the proposed confirmer are acceptable.
2) Wording Draft UCP 600 LC with usance tenor. Add a UPAS clause allowing discount at sight and reimbursement at maturity. State who pays discount. Keep document list lean and aligned to ISBP 745.
3) Confirmation and discount Confirmer adds confirmation and agrees to discount sight. Discount margin and fees pre agreed and stated in the LC or side letter. Use a confirmer in the seller’s country to speed payout.
4) Shipment and presentation Seller ships and presents documents to the nominated or confirming bank. Bank checks and pays at sight by discounting. Ask for a pre check on document templates before shipment.
5) Reimbursement and maturity Issuing bank reimburses the confirming bank at the usance maturity. Applicant pays the issuer per the LC agreement. Hedge FX to the maturity date. No heroics with open currency risk.

UPAS Wording That Works

Core clause
“This credit is available by deferred payment at xx days from B/L date. The confirming or nominated bank may, at its option, discount at sight. Issuing bank undertakes reimbursement at maturity.”
Fee split
“All discount, negotiation, and confirmation charges are for applicant’s account unless otherwise stated.”
Availability
Name the nominated bank and availability by negotiation or deferred payment. Avoid vague “any bank” language if you want speed.
Dates and place
Set latest shipment, presentation period, expiry place, and reimbursement route that match vessel and time zones.

Fees You Should Expect

Fee component Who pays When charged
Issuance commission Applicant Per quarter on LC amount
Confirmation commission Usually applicant or shared Per quarter until expiry
Discount margin Applicant On sight payout to beneficiary
Advising, negotiation, SWIFT Per LC wording On advice and at payment
Reimbursement bank fee Applicant At maturity on claim

Common Pitfalls and How to Avoid Them

Seller rejects issuer or confirmer
Pre clear names by email and attach to the contract addendum.
Ambiguous fee splits
State discount, confirmation, advising, and discrepancy fees inside the LC.
Overloaded document list
Keep to core docs. Fancy certificates create delays and discrepancies.
FX mismatch at maturity
Hedge to the usance date on day one. Do not guess the rate later.
Attention. Your seller wants sight cash and a clean bank promise.
Desire. You want 90 to 180 day terms without drama.
Action. Send your SPA or PO, target tenor, and bank lists. We will return wording, a confirmer route, fee elements, and a timeline to issuance.

How We Execute UPAS LCs That Close

Bank route
Issuers, confirmers, and reimbursement banks your counterparty accepts, with timing and fees.
Wording pack
UPAS clause, fee splits, reimbursement, and nominated bank language aligned to UCP 600 and ISBP 745.
Pre check and templates
Document templates reviewed by the confirming bank so the first presentation pays.
Execution control
We track dates, SWIFT traffic, reimbursement, and FX hedge to maturity.

Deliverables

  • UPAS LC draft with confirmation and discount language
  • Issuer, confirmer, and reimbursement route with contacts
  • Fee planner with discount, confirmation, and ops charges
  • Presentation checklist and document templates
  • Timeline from application to advice and to maturity

Need a UPAS LC that Pays at Sight and Gives You Terms

Share your contract, seller bank details, target tenor, and issuer or confirmer list. We will bring back wording, fees, and a path to issuance that matches your shipment dates.

Start the Process

This page is informational. Any LC is subject to KYC, sanctions screening, and independent credit approval. UPAS availability, tenors, and pricing vary by banks, corridor, and counterparties.

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