Discounting
Discounting is a form of financing with issuance of Letter of Credit stipulating deferred payment, i.e. the payment to the Beneficiary may be effected prior to the date indicated in the text of Letter of Credit at the cost of funds of the foreign bank (scheme).
Main terms and conditions required for implementation of such instrument of financing:
- form of settlements - confirmed letter of credit;
- financing is provided for the term up to 360 days;
- foreign trade contract should be in compliance with the financing scheme (the wording “Letter of Credit effected by deferred payment” and the Party responsible for the deferred payment and discounting commissions should be inserted in the terms of settlements).