When the seller presents the buyer's bank with the documents required by the LOC, which typically include invoice, bill of exchange (or draft), any necessary certificates such as certificate of origin and so on, the bank provides payment in accordance with the terms of the letter of credit.

The Bill of Exchange or draft is the demand for payment. Drafts are classified as either sight or time. A sight draft requires the buyer's bank to pay the amount shown in full upon proper presentation of documentation. A time draft stipulates payment by a date later than the date of presentation of documents (which may be identified as 30 days after sight or could be a specific date).