Document Against Payment & Acceptance

There are cases when traders do business without L/C terms. For instance, a buyer may not be able to obtain an L/C from his bank due to tight regulations. Another reason is when the buyer resides in a country where banks do not issue L/C at all. There are also cases when the exporter does not need an L/C since the buyer is a credible leading company or the import’s good financial standing is very well known to the exporter from the long standing business relationship. Generally speaking, exporting to an unknown overseas importer without L/C terms is rather risky, as there is no guarantee against non-payment by the importer. Nevertheless, there are two terms of settlement through documentary collection without using L/C. They are commonly called D/P (Documents against Payment) terms and D/A (Documents against Acceptance) terms.