Documentary Collections check0 / 1 answered · 0 correct
Check 1
Which method normally gives the buyer more time to pay?
D/P vs D/A
Understand Documents against Payment and Documents against Acceptance.
D/P — Documents against Payment
The presenting bank normally releases documents according to the collection instruction against payment. This reduces, but does not eliminate, seller risk.
D/A — Documents against Acceptance
Documents may be released against the drawee’s acceptance of a time draft or similar undertaking to pay later. The seller then carries the risk of future payment unless separately protected or financed.
Why the difference matters
D/P seeks cash before release. D/A gives the buyer time and therefore usually gives the seller more credit exposure.
Do not assume possession equals control
Cargo, title, local law, transport-document form and customs/storage issues can complicate what happens if the buyer refuses.
Remember thisD/P = release against payment. D/A = release against acceptance and payment later.
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