LC Usance Calculator

Calculate interest costs for Letters of Credit based on usance period.

LC Details

* 360 days is standard for USD/EUR in many markets. 365 is common for GBP/SGD.

Interest Cost

$0.00
Principal Amount $0.00
Total Payable $0.00

Calculation Summary

Daily Rate: 0.000000%
Term: 0 Days (0.0 Months)

Formula: (Amount Ă— Rate Ă— Days) / (Basis Ă— 100)

LC Usance Cost Evaluation Tool

What is an LC Usance Cost Evaluation Tool?

An LC Usance Cost Evaluation Tool is a trade finance utility that helps exporters, importers, and traders calculate the financing cost associated with usance (deferred payment) Letters of Credit. It estimates interest and time-based costs incurred due to delayed payment terms, enabling businesses to understand the true financial impact of offering or accepting usance periods in international trade contracts.

How can an LC Usance Cost Evaluation tool help you?

  • Calculate the cost of deferred payment under usance LCs
  • Compare sight LC vs. usance LC financial impact
  • Improve pricing and negotiation strategies
  • Support cash-flow planning and working capital management
  • Reduce hidden financing cost surprises

How do LC Usance Cost Evaluation tools work?

The tool calculates usance cost by applying an interest rate over the LC value for the agreed usance period (e.g., 30, 60, 90, or 180 days). By factoring in LC amount, tenor, and financing rate, it produces a clear estimate of the additional cost incurred due to deferred payment terms.

How to use Grains Global’s LC Usance Tool?

  • Enter the LC amount
  • Select the usance period (days)
  • Input the applicable interest or financing rate
  • Review the calculated usance cost
  • Use the output for pricing, negotiation, or finance planning

Advantages of using Grains Global’s LC Usance Cost Evaluation Tool

  • Designed for real-world commodity trade finance scenarios
  • Simplifies complex usance cost calculations
  • Improves visibility of financing impact on trade deals
  • Useful for exporters, importers, and trading houses
  • Supports smarter payment-term negotiations

Bonus #1: Critical Concept – Time Value of Money in Trade Finance

Usance periods introduce a time value of money factor into trade deals. Delayed payments mean capital is locked for longer periods, creating an implicit financing cost. Understanding this concept is essential for exporters and traders when structuring payment terms.

Bonus #2: Sight LC vs. Usance LC vs. Open Account

  • Sight LC ensures immediate payment upon document compliance.
  • Usance LC allows deferred payment after a fixed credit period.
  • Open Account offers maximum flexibility but higher payment risk.

Confusing these payment methods can impact risk and cash flow—this tool helps quantify the cost difference clearly.

FAQs – LC Usance Cost Evaluation Tool

A usance LC allows payment to be made after a specified credit period rather than immediately upon document presentation.
It depends on contract terms—either the buyer, seller, or shared as negotiated.
Usance LC costs vary by bank and interest rate and should be compared with alternative financing methods.
Yes. It supports multiple usance periods such as 30, 60, 90, or more days.
Ignoring usance cost can erode margins or make offers uncompetitive in international trade.