D/P (Documents against Payment)

Documents against Payment (D/P) is a type of documentary collection in which the seller delivers shipping documents to the buyer through a bank, but payment by the buyer is a condition for the release of documents. The bank acts only as a collecting agent and does not assume any payment responsibility. Use cases: suitable for transactions where the buyer and seller have a certain level of trust and the amount is moderate, commonly used in ocean shipping. Points to note: it is divided into sight D/P (payment upon presentation of documents) and usance D/P (payment a certain number of days after presentation of documents). However, under usance D/P, can the buyer obtain the documents without paying? In fact, under usance D/P, the bank still releases documents only against payment, but the buyer may first accept the draft and pay at maturity; the risk is that the buyer fails to pay at maturity. Difference from D/A (Documents against Acceptance): under D/A, the buyer can obtain the documents merely by accepting the draft, which carries greater risk. Difference from L/C: under L/C, the bank assumes primary payment responsibility, while under D/P the bank has no such responsibility. Therefore, the seller's risk under D/P lies between that under L/C and D/A. Sellers are advised to obtain export credit insurance or require advance payment.