Advance Clause Credits are documentary credits incorporate a clause which authorises the advising bank to make an immediate payment to the beneficiary (exporter) of an amount up to the total of the credit, or some lessor nominated amount.
The Advance Clause facility thus authorises the beneficiary to draw up to the amount specified prior to producing the relative export shipping documents. In effect, it enables the beneficiary to obtain a loan from the advising bank, guaranteed by the buyer’s bank, and to repay the loan with the proceeds of the drawing(s) made in terms of the credit.