UPAS Letters of Credit

We arrange UPAS LCs for importers and exporters that need real working capital without breaking operational discipline. Under a UPAS LC the exporter is paid at sight once documents are compliant, while the importer pays at a future maturity date. The nominated or confirming bank discounts the usance period against the issuing bank’s undertaking. You get longer terms as a buyer and your supplier gets cash on presentation. We broker the structure, line up the right banks, and manage the documentation so the instrument works in practice.

Who Uses UPAS and Why

• Importers: extend days payable without asking suppliers to carry you. Good for seasonal builds, capex components, and cross-border terms.
• Exporters: convert sales to sight cash without factoring. Bank takes the tenor risk on the issuing bank once documents are clean.
• Banks: keep LC discipline, control documents, and earn discount and confirmation income with clear risk parameters.

Mechanics At A Glance

Our Role As Your UPAS LC Broker

• Structure: tenor, currencies, confirmation, discount mechanics, and reimbursement terms suited to your cycle.
• Bank panel: shortlist issuing, advising, and confirming banks that actually run UPAS in your corridors.
• Negotiation: pricing on issue fee, confirmation fee, and discount margin. Clean wording to avoid recurring discrepancies.
• Execution: coordinate LC issuance, amendments, document checking standards, and settlement instructions.

Typical Pricing Components

When UPAS LCs Fit Best

• Suppliers want sight payment but you need terms to sell through inventory.
• You want LC controls and bank risk on documents, not open account exposure.
• Cross-border trades where confirmation removes country or bank risk for the exporter.
• Repeat shipments on consistent terms where standard wording saves time.

Illustrative UPAS Structures

Examples only. Actual terms depend on credit, corridor, currency, and bank appetite.

Documentation & Control Standards

• UCP 600 governed LC with clear presentation period and expiry.
• Clean list of documents: invoice, transport, packing list, certificate of origin, inspection as needed.
• No vague conditions. Conditions must be documentary and objective.
• Confirmation where exporter or corridor risk requires it.
• Irrevocable reimbursement undertaking and tested SWIFT instructions.

Our Process

1. Intake. Trade flow, counterparties, corridors, tenor, currency, and volumes.
2. Term sheet. Issue bank, advising/confirming bank, pricing grid, documents list.
3. Wording. Draft LC text, agree data fields, and remove traps that cause discrepancies.
4. Approval. Issuing bank credit, KYC, limits, and any cash margin requirements.
5. Issuance. SWIFT issue, exporter acceptance, shipment planning.
6. Presentation and discount. Documents checked, discount applied, exporter paid.
7. Maturity. Importer reimburses with interest; we align hedges and cash planning.

What Banks Will Check

• Importer credit, limits, and any required cash margin or collateral.
• Sanctions, AML, and dual-use concerns on goods, routes, and parties.
• Country and bank risk on confirmation. Availability of discount lines.
• Historical discrepancy rates and document quality by the exporter.
• Currency and tenor appetite. Longer tenor may require higher margins.

Common Pitfalls and Fixes

• Discrepancies: preventable with tight wording and checklists. We run pre-checks and train the exporter’s ops team.
• Currency swings: hedge reimbursement date; match tenor to receivable cycle.
• Country risk: add confirmation or use a confirming bank with appetite for the corridor.
• Over-complex conditions: strip subjective clauses; keep requirements documentary.

FAQs

Is UPAS under UCP 600 or ISP98
Most commercial UPAS LCs are issued under UCP 600 with usance terms. Standbys would reference ISP98. We will align the rule set to the transaction.

Who pays the discount interest
The importer. The exporter receives sight proceeds; the discount cost is embedded in the importer’s reimbursement at maturity.

Do I need confirmation
Only if exporter requires it or country/bank risk warrants it. We will price both options.

What tenors are common
30 to 180 days. Longer tenors depend on goods, corridor, and bank appetite.

Can this work with partial shipments
Yes if permitted in the LC text. Each drawing will have its own usance and reimbursement date.

We act as an advisor and arranger. We are not a bank. Any UPAS LC is subject to bank credit, KYC, AML and sanctions screening, documentary compliance, and executed terms between all parties. Fees, rates, and tenors vary by jurisdiction, currency, goods, and bank risk.