Red Clause Letter of Credit (LC) – Advance Payment for Global Trade | NNRV Trade Partners
Ensure Secure & Flexible Global Trade Financing | 100+ Pre-Shipment LC Structures | SWIFT Network Connected
🚀 Unlock Cash Flow with Red Clause LC – Secure Advance Payment for Suppliers
⚠️ Facing Delays Due to Lack of Advance Payment? A Nigerian cashew nut supplier nearly lost a $1.5M UAE contract due to lack of pre-shipment capital. Within 72h, NNRV structured a Red Clause LC with a $400K advance. The goods were shipped on time and the deal was saved.
🧠 « Without NNRV’s Red Clause LC, we couldn’t fund production. Their speed and structure saved our export season. »
📌 What is a Red Clause Letter of Credit (LC)?
A Red Clause LC is a type of documentary credit that allows the seller (exporter) to receive an advance payment from the issuing bank before fulfilling shipment obligations. This advance is deducted from the final LC value upon delivery, ensuring suppliers have the necessary capital to procure raw materials, manufacture goods, or prepare shipments.
At NNRV Trade Partners, we offer Red Clause Letters of Credit (MT700), a specialized trade finance tool designed to provide advance payments to suppliers before shipment. This unique financial instrument enhances supplier liquidity, secures production financing, and ensures a smooth supply chain for international trade.
🔜 Key Advantages:
✅ Pre-Shipment Financing: Exporters receive part of the payment upfront.
✅ Stronger Buyer-Seller Trust: Assures suppliers while securing goods for buyers.
✅ Flexible Trade Agreements: Buyers secure supply chains while maintaining deferred payment structures.
✅ Governed by UCP 600: Fully compliant with International Chamber of Commerce (ICC) regulations.
🔹 How Does a Red Clause LC Work?
1️⃣ Issuance of Red Clause LC: The buyer’s bank issues a Red Clause LC (MT700) with a pre-agreed advance payment percentage clause.
2️⃣ Advance Payment to Seller: The seller (exporter) requests a portion of the LC amount before shipment.
3️⃣Beneficiary Requests Advance – Seller requests advance by submitting signed invoice + indemnity letter.
4️⃣ Advance Released by Bank – Bank releases advance (typically 20-70% of LC value).
5️⃣ Shipment Occurs – Goods shipped + full documentation submitted.
6️⃣ Final payment made after shipment compliance.
📄 Required Documents for Red Clause LC Issuance
✔ Proforma Invoice / Sales Contract – Defines trade terms and advance payment details.
✔ Bank Guarantee (if required) – Acts as collateral for advance payment.
✔ Letter of Indemnity (LOI) – Confirms seller liability for pre-shipment funding.
✔ Commercial Invoice – Specifies the product value and total transaction amount.
✔ Bill of Lading / Airway Bill – Proof and Confirms shipment completion.
✔ Packing List – Details shipment specifications.
✔ Insurance Certificate – Covers potential logistics-related risks (if applicable).
🏦 Top Banks & Financial Institutions for Red Clause LC (MT700)
We work with trusted global banks to facilitate secure Red Clause LC issuance in support of supplier cash flow management, ensuring smooth international trade transactions.
🔹 Top Banks Issuing Red Clause LC (MT700):
| Bank Name | SWIFT Code | Advantages | Disadvantages | Issuance Fees | Issuance Time | Min. Transaction | Region |
|---|---|---|---|---|---|---|---|
| Bank of China | BKCHCNBJ | Strong for structured LCs & Asia trade | Slower in multi-party LC issuance | 0.5% – 7% | 2–6 days | $1M | Asia |
| Standard Chartered (Dubai) | SCBLAEAD | Supports advance LC mechanisms | Documentation-intensive | 0.5% – 7% | 2–6 days | $500K | Global |
| Exim Bank Tanzania | EXTNTZTZ | Suitable for Africa-based producers | Slower validation | 0.5% – 7% | 2–6 days | $250K | Africa |
| MauBank (Mauritius) | MPCBMUMU | Offshore-friendly issuance | Limited global access | 0.5% – 6% | 2–5 days | $250K | Offshore |
| ABC Banking Corporation | ABCKMUMU | SME-aligned LC structures | Less known globally | 0.5% – 6% | 2–5 days | $250K | Offshore |
| Access Bank Kenya | ABNGKENA | Trade facilitation for East Africa | Lower visibility in EU/US | 0.5% – 7% | 2–5 days | $250K | Africa |
| Dashen Bank (Ethiopia) | DASHTEAA | Effective for local supplier LC | Slower compliance turnaround | 0.5% – 7% | 3–6 days | $250K | Africa |
Other banks available upon request.
📢 All transactions comply with ICC & UCP 600 regulations for global trade finance security.
📚 Red Clause vs Green Clause LC
| Instrument | Advance? | Covers Storage/Insurance? | Best For |
| Red Clause LC | ✅ Yes | ❌ No | Procurement & Production |
| Green Clause LC | ✅ Yes | ✅ Yes | Full pre-shipment prep |
| Sight LC | ❌ No | ❌ No | Immediate post-shipment pay |
| Usance LC | ❌ No | ❌ No | Deferred buyer settlement |
📊 Why Choose NNRV for Red Clause LCs?
🔹 Pre-Shipment Structuring – Tailored LC clauses for production, agriculture, and manufacturing
🔹 Fast Advance Releases – Within 48–72h upon LC activation
🔹 Global SWIFT Network – Trusted bank partners in 40+ jurisdictions
🔹 UCP 600 Compliant – Legal protection for buyer and seller
🔹 SME Friendly – From $250K to $100M deals
💡 Why Choose NNRV Trade Partners for Red Clause LC?
🔹 Advance Payment Security: Funds are released under controlled LC conditions.🔹 Increased Supplier Liquidity: Sellers receive funds capital upfront before shipment.
🔹 Custom LC Issuance: Tailored trade finance structures for specific industries.
🔹 Global Expertise: Years of experience in structured finance & risk mitigation.
🔹 Regulatory Compliance: Fully aligned with UCP 600 & SWIFT standards.
💬 Real Testimonials
🧠 “NNRV got us $200K in advance for cocoa bean supply in less than 72 hours.” – Patrick E., Exporter, Ghana
🧠 “The Red Clause LC allowed us to start production immediately. It’s a game-changer.” – Lina D., Textile Supplier, Tunisia
🤔 Frequently Asked Questions
What’s the typical advance rate under Red Clause LC? ✅ Usually 20–50%, but up to 70% with strong documentation.
Do I need collateral? 📆 Not always. Some banks accept LOI + verified documents. Others may require a BG.
Is the LC globally accepted? 🚀 Yes – all LCs issued via SWIFT MT700 and UCP 600.
What’s the difference between Red and Green Clause LC? 🔹 Red Clause: advance for procurement. Green Clause: advance for procurement + storage/insurance.
Can I use this as a new exporter? ✅ Yes, we support SMEs and new entities with valid contracts.
🔗 Related Services
SBLC |
POF |
📏 Learn More in Our Blog
✍️ Red vs Green Clause LC: Which One Fits Your Deal?
✍️ Why Pre-Shipment Financing Is Booming in Africa
✍️ How to Structure the Perfect LC for Seasonal Commodities
🚀 Ready to Secure Pre-Shipment Funds?
📩 Book Your Free LC Structuring Call Today
📧 Contact NNRV Trade Partners | 🌍 Trusted in 40+ Countries | ✅ From $250K to $100M+ Advance LC Options