DA/DP Payment Terms | What You Need to Know

DA/DP Payment Terms | What You Need to Know

When it comes to export and import, there are various payment methods available that one must be knowledgeable of. If you have heard of D/P and D/A, you may be unsure of what they actually mean. It is important to note that both of these payment terms fall under the category of documentary collection. In simpler terms, transactions between buyers and sellers are conducted through banks, rather than through direct money transfers.

However, having a basic understanding of these concepts may not be enough if you are regularly involved in international transactions using D/A or D/P. This post is intended to provide you with the necessary insights, and you can access the relevant content through the links provided below.

• What is D/A?
• What is D/P?
• D/A and D/P Process Flow in 5 Steps (Example).
• Onestopimport Assists with Product Certs and Inspection

What is D/A?

D/A stands for Documents Against Acceptance. Under this payment term, buyers can obtain shipping documents from the bank after accepting a bill of exchange (B/E), and then make payments by the due date of the bill. D/A is advantageous for buyers, as they can pick up goods before paying by obtaining the Bill of Lading (B/L).

For example, take D/A 90 days. The bank notifies the buyer to confirm the B/E and endorse “acceptance” on the bill. The buyer then tells the bank, “I will pay within 90 days. Give me shipping documents first.” The bank replies, “Okay, I trust you and release the documents for you to take delivery of goods.”

What is D/P?

D/P stands for Documents Against Payment. Under D/P, sellers instruct the bank to release documents only after buyers fully pay for the shipments.

Compared to D/A,

• D/P terms require buyers to pay first and then obtain the Bill of Lading (B/L) to take over the goods. From the seller’s standpoint, D/P is safer than D/A.
• Both D/A and D/P require sellers to surrender documents, including the B/E and B/L, and buyers to make their payments through banks, instead of direct connections.
• There are typically two common types of D/P:
• D/P at Sight, Documents Against Payment at Sight.
• D/P after Sight, Documents Against Payment After Sight.

D/P at Sight

D/P at sight means that buyers pay for their order once they confirm there is no problem with documents like B/L.

Take 100% D/P at sight for example. The bank notifies the buyer to confirm documents and make a full payment to receive them for the receipt of the goods. Usually, the buyer will go to the bank to pay or authorize the bank to directly deduct the amount from their account. After that, the buyer will receive the B/L for customs clearance and cargo receiving.

D/P after Sight

Under D/P after sight, buyers are supposed to promise to pay by a certain date. Before the promised payment date, the bank will keep the B/E and shipping documents unreleased.

Generally, there are three ways to regulate the payment date under D/P after sight:

1. Payment xxx days after seeing the B/E.
2. Payment xxx days after the B/L date.
3. Payment xxx days after the date of issuance.

Additionally, some countries regulate payment xxx days after the arrival of the goods.

Common payment terms are D/P 30-60 days after sight, often used in long-distance ocean shipping. It might take 30 days or more to transport goods. Buyers can wait until goods arrive or approach the destination port, then finish all the payments to get the B/L. In this case, it can ease buyers’ cash flow pressures.

D/A and D/P Process Flow in 5 Steps (Example).

The process flow of D/A and D/P is roughly the same as L/C’s, but there is no bank for credit guarantee. Here is an example of how D/P works in actual business.

• Big retailer A, doing business in the USA, now imports a large number of daily products from China and asks for D/P at sight to pay.

British Standards Institution

DEKRA SE

Eurofins Scientific SE

TÜV Rheinland AG

TÜV SÜD

Applus+ IDIADA

Onestopimport Assists with Product Certs and Inspection

Contact TIC Companies for Relevant Certificates

For the products purchased by our clients, we check the required product certificates and documents for international trade and sales in the target market. We select suppliers in our database who have these product certificates. For some products that require certification, we contact these professional and authoritative inspection agencies to help test the products and get related reports.

Offer Flexible Quality Control Services

In most cases, third-party inspection companies only report passed or failed. Compared to these companies, large and professional sourcing agencies like Onestopimport can provide flexible inspection services including:

Inspect the Product Based on Your Focus

We have our warehouse and professional staff to provide quality control service according to your requirements. We will do a general inspection of your products according to the AQL sampling inspection like 3rd party testing agencies. If you have strict requirements for product quality and want to reduce the defect rate to 0%, you can choose our full inspection service.

Before the inspection, we communicate with you to understand your requirements and focus points. If you want to check if there are scratches on the leather surface or any workmanship issues such as crooked stitching lines or defects on hardware, we will not count some small defects such as wrinkles or curled edges into defective rates. As you can see, we can improve the efficiency of quality inspection.

Communicate with You Timely When Inspecting

We will send you a video when inspecting. For each defect found, we will communicate with you in real-time and ask if you accept it. If you have any additional requirements during the inspection, such as drop testing for product packaging, it is also acceptable.

Charge a Lower Fee and Provide a Follow-up Guarantee

We charge $40 per person per day. Even for a full inspection, our rate is only $5 per hour, which is much lower than inspection companies who usually charge $200-300 per person per day.

In addition, if you use the suppliers we select and buy products from them, we offer free replacement of defective products during the inspection and provide follow-up guarantee services.

That is, if you find any defects in the products within 15 days of receipt and provide evidence, we will replace or compensate you for free. If you have your suppliers, we will communicate with them until the problem is resolved, but you need to pay for logistics costs, traveling fees, etc.