Smart LC with Conditional Payment Triggers

Smart contracts encode trade terms and regulatory rules directly into the LC, executing payments only when verifiable conditions are met. This eliminates manual document checks and reduces fraud risk.

• Real Example: A major agri-trader reduced discrepancies and fraud attempts by over 70% by using IoT sensor data (like temperature) to trigger payments upon verified delivery condition.
• ROI Driver: Cuts audit costs and eliminates losses from fraudulent or non-compliant shipments.

Conditional triggers (e.g., bill of lading, customs clearance) automatically release payment in minutes, not weeks. This accelerates the cash conversion cycle for all parties.

• Real Example: An automotive parts exporter reduced payment settlement from 10-15 days to under 24 hours, improving their Days Sales Outstanding (DSO) by 14 days.
• ROI Driver: Unlocks trapped working capital, reducing reliance on expensive short-term financing and improving liquidity.

Every step—from issuance to amendment to final payment—is immutably recorded on the blockchain. This creates a single source of truth accessible to all authorized parties.

• Real Example: A multinational retailer streamlined disputes with suppliers by providing an indisputable, timestamped log of document submissions and approvals, cutting reconciliation time by 60%.
• ROI Driver: Drastically reduces administrative overhead in dispute resolution and regulatory reporting.

Automation eliminates manual, repetitive tasks like document matching, data entry, and communication across banks, shippers, and insurers.

• Key Savings Areas:
  • Processing Costs: Reduce by 50-80% by removing paper and manual workflows.
  • Bank Fees: Lower LC issuance and amendment fees due to reduced operational risk for the bank.
  • Error Resolution: Minimize costs associated with correcting human errors in documentation.
• ROI Driver: Direct bottom-line impact through headcount optimization and process efficiency.

The immutable proof of performance enables trade with new or higher-risk counterparties by de-risking transactions. It also facilitates innovative financing like inventory financing against verified, in-transit goods.

• Real Example: A SME manufacturer secured better financing terms from a bank by providing real-time, blockchain-verified proof of shipment and purchase orders.
• ROI Driver: Opens new revenue streams and markets by enabling secure trade in previously untenable scenarios.

Smart LCs can connect to Internet of Things (IoT) sensors and external data oracles (like port authorities) to trigger payments based on real-world events.

• Conditional Triggers in Action:
  • Payment release upon container geo-fencing at destination port.
  • Payment adjusted if temperature sensors indicate spoilage.
  • Automatic insurance payout if shipment delay exceeds contract terms.
• ROI Driver: Enables hyper-efficient, context-aware settlements that reduce disputes and optimize supply chain logistics.

Before: Manual cross-checking of bills of lading, invoices, and certificates across banks, shippers, and buyers takes 5-10 days, with a high risk of discrepancies and fraud.

After: All documents are digitally hashed and anchored on-chain. A single, immutable record is shared instantly with all permissioned parties. Smart contracts automatically verify document authenticity against pre-agreed terms, slashing reconciliation time to minutes.

Example: A major European bank reduced document processing from 7 days to under 4 hours, cutting operational costs by 65%.

Before: Payment release depends on manual approval after document verification, creating delays and settlement risk. Disputes freeze capital.

After: Smart contract escrow holds funds. Payment is automatically released upon on-chain proof of fulfillment (e.g., GPS-confirmed port arrival, IoT sensor data). This eliminates manual intervention, guarantees payment upon performance, and reduces counterparty risk.

ROI Driver: Accelerates cash flow by 15-20 days and reduces the capital required for risk reserves.

Before: Audit trails are siloed across different entities' systems. Proving compliance or resolving disputes requires reconciling conflicting paper trails, a costly and slow process.

After: Every step—document submission, approval, amendment, and payment trigger—is recorded on an immutable, timestamped ledger. This provides a single, indisputable audit trail for regulators and drastically simplifies dispute resolution.

Compliance Benefit: Enables real-time regulatory reporting and cuts audit preparation time by over 70%.