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We use for Escrow payments exclusively


Here is why:

Whilst SBLC’s sound great in theory, how do they actually work in practice?


Its easy for a supplier to simply say, “we want an SBLC” but what’s the actual process even on a Performance SBLC in fact any SBLC of any type.


Firstly SBLC’s are not cheap to set up incurring similar costs to DLC’s. The difference is that the bank itself doesn’t check documents for payment, the client does however, how is an SBLC set up.


  • The buyer needs to set up a CASH payment to set up the SBLC irrespective of what type of SBLC it is
  • The buyer enters in contracts to buy product. If the seller happens to dispatch the product, the buyer has to pay for that product by Wire Transfer. The funds for the SBLC cannot be touched so the buyer pays twice.
  • This means if the sale is 500k, the buyer needs $1 mill to finalize the transaction. The SBLC funds are released back to the buyer once the seller has received their funds.




  • The buyer needs cash to set up an escrow payment. The funds are transferred under instruction by the escrow company to an Independent account .
  • The account is viewable to the buyer, the seller and the escrow company however no party has authority to release funds until terms of the SPA have been met in full
  • Documents are checked and verified by the escrow company to ensure documents are valid.
  • The funds are released from the escrow account only by the escrow company on successful verification and notification to the buyer by the escrow company.



Escrow- extremely safe- no payment twice.


Escrow less to set up than SBLC


Finally- DLC/LC



  • These also require cash or a bank loan to set up and are expensive to facilitate. This transaction is strictly bank to bank without customer involvement.
  • The seller submits shipping documents etc to his bank who checks the documents are complaint with the DLC
  • The sellers bank transmits the original documents ( generally by courier but may be agreed to electronically) to the buyers bank where the DLC is situated wherever that is in the world
  • The buyers bank checks the documents are complaint with the DLC. Banks do not check documents for fraud or forgery. The buyer has zero control over documents
  • The bank, once satisfied the documents comply with the DLC, release the funds associated with the DLC to the sellers bank.


Biggest problem with DLC is cost of set up, time taken for release of funds however the biggest danger is fraudulent documents which are not checked by the bank so scammers send no product at all. They send fraudulent documents and we have seen some very clever frauds. The buyer ends up with no goods and no money. The banks have complied with UCP600 rules and are absolved of financial risk



I hope the above helps understanding of financial documents for trading.


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