Buyers Credit Vs. Suppliers Credit

Difference Between Buyers Credit and Suppliers Credit

  • Theoretically speaking, as the name suggests, importer of goods applies for buyers credit and exporter of goods applies for suppliers credit.
  • For all practical purposes, importer applies for buyers credit as well as suppliers credit.
  • Suppliers credit can only be arranged against LC backed transaction whereas buyers credits can be arranged Sight LC, Usance LC, DA & DP excluding Advance Payment
  • Generally Buyers Credit quote is arranged for after opening of the LC whereas suppliers credit quote is tied up before opening of the LC. LC is then opened as per the terms of the funding bank in case of suppliers credit. However, when the LC is opened before tying up for the funds in a suppliers credit, it might need amendment as per the funding bank.
  • Letter of Undertaking(LOU) issuance charges are applicable in case of buyers credit whereas since suppliers credit is an LC based transaction, no Letter of Undertaking(LOU) charges are applicable.