What is a Deferred Payment?

Deferred payment is referred to as "deferred payment". The payment unit for collection and settlement of settlements, at the expiration of the commitment period, has delayed payment due to no payment or insufficient payment capacity. In the event of deferred payment, the payer shall pay the bank to notify the payer, urging it to raise funds as soon as possible and repay the payment as soon as possible. At the same time, notify the beneficiary unit to open an account with the bank. When the payment unit has a payment, the bank that opened the account of the payment unit implements the deduction in accordance with the deduction order prescribed by the state, handles the transfer formalities, and pays a compensation based on a certain percentage of the deferred amount according to the deferred payment days. Collection unit. For units that have been in arrears for a long period of time, banks may stop using collection and settlement methods and use letters of credit or exchange settlement methods to maintain the legitimate rights and interests of the receiving units. ^[1]

delay payment

Deferred payment is referred to as "deferred payment". The payment unit for collection and settlement of settlements, at the expiration of the commitment period, has delayed payment due to no payment or insufficient payment capacity. In the event of deferred payment, the payer shall pay the bank to notify the payer, urging it to raise funds as soon as possible and repay the payment as soon as possible. At the same time, notify the beneficiary unit to open an account with the bank. When the payment unit has a payment, the bank that opened the account of the payment unit implements the deduction in accordance with the deduction order prescribed by the state, handles the transfer formalities, and pays a compensation based on a certain percentage of the deferred amount according to the deferred payment days. Collection unit. For units that have been in arrears for a long period of time, banks may stop using collection and settlement methods and use letters of credit or exchange settlement methods to maintain the legitimate rights and interests of the receiving units. ^[1]

use

Deferred Payment Letter of Credit is a type of forward letter of credit, also known as draftless letter of credit. The function of the deferred payment letter of credit is the same as that of the forward letter of credit, except that the term is different.

The bill law promulgated by some countries and regions stipulates that no acceptance bills with a maturity of more than six months or forward bills with a maturity of more than one year shall not be discounted on the market. At the same time, the term of the forward bill must not exceed 180 days. In this case, in order to solve the payment method from one year to more than one year or several years later, in the practice of international trade, a deferred payment letter of credit came into being. And it is widely used.

The deferred payment letter of credit is applicable to the import and export of large-scale mechanical and electrical complete sets of equipment. In order to strengthen competition conditions, deferred payment, medium-to-long-term loans from sellers, or exports due to credit can be adopted. However, the time limit is long, the exporter does not need to present the draft, and the issuing bank does not accept the draft, but it is paid by the bank on the maturity date ^[2] .