International Trade Finance Calculator

This calculator totals up the real all-in cost of financing an international shipment through a Letter of Credit (LC) and compares it against two common alternatives. On the LC side, it sums four fee components as percentages of shipment value — issuance (paid to the issuing bank), confirmation (paid to a second bank that adds its own payment guarantee, common when the exporter doesn't fully trust the issuing bank's country risk), and negotiation (for examining shipping documents) — plus flat per-change amendment fees and SWIFT messaging fees (charged for the opening message, an advice message, and each amendment). If the LC has a deferred payment tenor (a usance LC rather than a sight LC), the calculator adds a financing cost using simple interest: Principal × Rate × (Days ÷ 360), the standard trade-finance day-count convention, reflecting the cost of that money being tied up or the banker's acceptance discount an exporter would pay to get paid early.

It reports both the raw total cost and an annualized percentage, useful for comparing a 90-day LC against financing instruments quoted on an annual basis. The calculator then models two lighter-weight alternatives: documentary collection (a bank fee plus two SWIFT messages, with no bank payment guarantee — the exporter's payment security rests entirely on the buyer's willingness to pay) and open account trading backed by trade credit insurance (an insurance premium plus the same deferred-payment financing cost, if applicable). The "LC vs Insurance Cost Difference" output shows which route is cheaper for your specific numbers: a positive value means insurance-backed open account terms cost less than the LC, though the calculator only measures cost — it doesn't capture the payment-security difference between an LC's bank guarantee and an insurer's claims process, which is often the real reason exporters choose the more expensive instrument.