What is usance lc?

A usance letter of credit (LC) is a financial instrument used in international trade that allows the buyer to make payment at a future date rather than at sight. Typically, it specifies a deferred payment period, during which the seller ships the goods and presents the necessary documents to the bank. The bank then pays the seller after the agreed-upon usance period, which can range from 30 to 180 days, allowing the buyer time to sell the goods and generate revenue before making the payment. This arrangement helps facilitate trade by providing flexibility in payment terms.