Documents against payment, or D/P, is a documentary collection instruction requiring the collecting bank to release specified documents only after the importer pays. The importer normally needs the documents to obtain control of the goods, so payment and document release occur together under the collection instruction.
How is Documents Against Payment (D/P) used?
The exporter sends the collection documents through the banking chain with instructions to release them only after the importer pays. The collecting bank follows the instructions and remits the funds, but it does not guarantee payment. If the importer refuses, the exporter must decide how to store, redirect, return or sell the goods.
What should a business document for Documents Against Payment (D/P)?
Record the collection order, documents presented, amount, currency, bank charges, payment date and release confirmation.
What should a business verify before relying on Documents Against Payment (D/P)?
The bank does not inspect the goods or guarantee that the importer will pay. Refusal can leave the exporter controlling goods at destination.
