Letter of credit monetization, or discounting, is never free money. When you convert a confirmed letter of credit into immediate cash, you pay a mix of discount margin, bank fees, legal costs, and advisory charges. Anyone presenting monetization as a simple “1 or 2 percent flat” is omitting most of the pricing stack or describing a structure that will not clear in a regulated bank.
Monetization or discounting means a bank or financial institution advances cash today against the future payment obligation under a documentary letter of credit or a standby letter of credit. Instead of waiting 60, 90, or 180 days for maturity, you receive funds at sight. The discounter gets paid later when the issuing or confirming bank settles the letter of credit at maturity, and keeps the margin and fees as compensation for risk and time value of money.
The cost sits on top of the existing structure. You already pay the issuing bank for issuing the letter of credit and often a confirming bank for adding its confirmation. Monetization adds a further layer of pricing for early cash and additional credit risk.
The total cost of monetization is the combination of these items. Focusing on a single headline number misses the way banks and investors actually price risk, capital, and operational work.
Beyond the explicit price sheet there are indirect costs that affect your economics. Ignoring these can make a transaction look cheaper on paper than it really is once you run the full model.
We work with clients to structure letters of credit and discounting facilities that are bankable and transparent on cost. That means choosing suitable issuing and confirming banks, aligning tenor and structure with the underlying trade, and negotiating discount margins and fees that reflect real risk instead of marketing slogans.
Before you commit, we map out issuance, confirmation, discount margins, bank charges, legal costs, and our own advisory or success fees so you can compare the annualized cost of monetization with other funding options such as trade loans, receivables finance, or working capital lines.
If you are planning to discount or monetize letters of credit and want a clear, bank-grade view of total cost, speak with us. We focus on structures that can actually clear and support real trade, not theoretical pricing.
Contact UsWe act as arranger and advisor through regulated partners. We are not a bank and we do not hold client funds. All services are subject to KYC, AML, and sanctions screening. Pricing examples in this article are indicative only and every facility is subject to full underwriting, credit approval, and legal documentation.
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