Overview of At Sight
‘At sight’ is a financial term often referenced in the context of bills of exchange, letters of credit, and trade finance. It signifies that payment is due and must be made immediately upon presentation of the relevant document.
Examples
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Trading Operations:
- A company exports goods to an international client and sends a bill of exchange marked ‘at sight.’ Upon receiving the bill, the importer must pay the amount specified immediately.
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Letter of Credit:
- A letter of credit issued by a bank may stipulate that the beneficiary will be paid ‘at sight’ upon the presentation of specific documents, such as shipping receipts.
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Customs Documentation:
- An international shipment might require the importer to pay all associated fees and taxes ‘at sight’ once the shipment arrives at customs.
Frequently Asked Questions (FAQs) About At Sight
What does ‘at sight’ mean in financial documents?
‘At sight’ indicates that the payment is due immediately upon presentation of the document. There is no deferral period, as is the case with ‘after date’ or ‘after sight’ terms.
How does ‘at sight’ differ from ‘after date’?
‘At sight’ demands immediate payment when the document is presented, while ‘after date’ provides a specific period after the issuance date during which payment must be made.
Is ‘at sight’ common in international trade?
Yes, ‘at sight’ is a common term in international trade, especially in transactions involving bills of exchange and letters of credit to ensure prompt payment.
Can ‘at sight’ terms be negotiated?
Yes, like most financial terms, ‘at sight’ can be negotiated between the involved parties based on their agreements.
Are there any risks associated with ‘at sight’ terms?
For the payer, the risk lies in the immediate obligation to liquidate funds, which can impact cash flow. For payees, the principal risk is the potential for disputes over the authenticity or condition of presented documents.
How does ‘at sight’ impact cash management?
For businesses, ‘at sight’ terms necessitate a well-managed cash flow to ensure immediate availability of funds, preventing liquidity issues.
Can banks provide support for ‘at sight’ payments?
Yes, banks often play a significant role in facilitating ‘at sight’ payments, particularly through letters of credit, ensuring security and compliance with terms.
Related Terms
- Bill of Exchange: A written order used in international trade that binds one party to pay a fixed amount of money to another party on demand or at a predetermined date.
- Letter of Credit: A letter from a bank guaranteeing that a buyer’s payment to a seller will be received on time and for the correct amount.
- After Date: A term indicating that payment is due after a specified number of days from the date of the bill of exchange.
- After Sight: A term specifying that payment is due a certain number of days after the bill of exchange is presented.
Online References
- Investopedia - Bill of Exchange
- The Balance - Letters of Credit
- Corporate Finance Institute - Payment Terms
Suggested Books for Further Studies
- “The Law of Bills of Exchange, Promissory Notes, Bank Notes, and Cheques” by James William Norton-Kyshe
- “Trade Finance: A Complete Guide” by Peyman Khosravi
- “International Trade and Finance” by Paul R. Krugman and Maurice Obstfeld
Accounting Basics: “At Sight” Fundamentals Quiz
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