Documents against Payment (D /P) refers to a method of settlement whereby a collecting bank can hand over commercial (shipping) documents to the importer only after the importer has paid up.
D/P Sight (D/P Sight) means that a draft is drawn at sight by the mouth and presented to the importer by the collecting bank. The importer must make payment upon sight. When the payment is paid off, the importer will get the shipping documents.
D/P after sight or after date (D/P after sight or after date) refers to the time bill issued by the mouth, presented to the importer by the collecting bank, accepted by the importer, and paid by the importer on or before the maturity date of the draft.
Existing risks:
In D/P business, the bank does not review the contents of the documents, and the bank does not assume the payment obligation. The bank only provides services such as forwarding documents, presenting documents on behalf of the bank, and receiving and transferring funds on behalf of the bank. In the D/P export business, exporters should pay attention to the following important issues:
1. In the D/P business, the guarantee that the exporter can obtain the payment is the credit of the importer, so paying attention to the payment ability and business reputation of the importer is an important prerequisite for getting the payment.
2. In the delivery of goods, documents from the exporter to the importer in the flow process, pay attention to the control of documents to control the goods, before the importer pays, should be firmly controlled documents.
3. In practice, problems often occur in the circulation of documents and the junction point, that is, the junction point of the exporter to the bank, the junction point of the seller's bank to the buyer's bank, and the junction point of the buyer's bank to the importer. Therefore, it is necessary to control these junction points, and the documents should be transferred in accordance with the standard.
4. Use the order bill of lading whenever possible. In this way, the goods can be controlled by controlling the bill of lading.
The risk of D/P Although the bank of the import place must pay the importer before the documents can be delivered to the importer in both cases, the legal risk of the two should be said to be the same, but because of the different risks faced in business practice, the risk of the exporter directly presenting the payment to the bank designated by the buyer is greater. According to the provisions of the Uniform Rules of Collection of the International Chamber of Commerce, the normal collection practice is that the export company entrusts its correspondent bank to handle the collection, and the remitting bank then entrusts the correspondent bank of the importer or the bank named by the importer to handle the presentation of payment (remitting bank). However, in the collection business, the collection bank is not obliged to accept the entrusting of the exporter. In other words, after receiving a collection order, the bank has the right to refuse to handle it. The exporter conducts the collection through its own correspondent bank (Remitting bank), and the remitting bank will arrange for the remitting bank (whether or not the bank is named by the importer and whether or not it is the importer's correspondent bank) to handle the presentation and collection on its behalf. The remitting bank shall bear the obligation to the exporter for the risks incurred in the process of mailing the collection documents. Moreover, if there is any problem during the presentation of payment, the collection bank will liaise fully and effectively with the collection bank.
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