Is DP terms of payment safe in export business?
Thursday, October 27, 2016     Category : For Beginners


The information provided here is part of Export Import Training course online

What is DP term of payment? How does DP term of payment work?


DP OR DAP term of payment is one of the terms of payment in international trade.


D.A.P or D/P terms of payment means, Documents Against Payment.


Once cargo shipped out from supplier’s premises, after completing necessary export legal formalities of exporting country, he hands over goods to the carrier who transport to the final destination of buyer. After delivery of goods, exporter is issued Bill of Lading (under sea shipment) or Airway Bill (under air shipment) by Carrier or his agent.

 Is D.A.P terms of payment safe in export business

Exporter submits all required documents along with Bill of Lading /Airway bill, invoice, packing list, bill of exchange with the bank to send to buyer through buyer’s bank.


The seller’s bank, once after verification sends these shipping documents to buyer through buyer’s bank. After receipt of such shipping documents by buyer’s bank notifies buyer on receipt of documents and advise to ‘accept’ the documents by effecting payment of export proceeds. Under a DP terms of payment (DAP terms of payment), the buyer collects original shipping documents from his bank after making necessary payment against sale of goods.


The buyer, once after collecting shipping documents from bank completes necessary customs clearance procedures in importing country and collects goods from carrier.




Why delay to receive money from overseas buyer under DP terms?


Although terms of payment under sale contract is against DP basis, some of the exporters (sellers) receives sale amount late. This happens commonly under sea mode of shipment. Why?


As you are aware, the transit time to arrive goods under sea shipment is more than air shipment. The original shipping documents are required mainly for the purpose of taking delivery of goods from carrier after necessary legal import customs clearance procedures and formalities. Under DP terms, some of the importers do not accept documents immediately from bank even after notifying by his bank. He delays to accept documents from bank till arrival of goods at port of destination. So, under DP terms of payment, the buyer drags to collect original shipping documents from his bank till arrival of goods at port of final destination.  Also read    Advance payment the best way of terms for business    Letter of credit - How does LC work?           Documents against Acceptance. - How reliable the terms of payment in exports


I hope, I could explain you the mechanism of DP terms of payment in simple language.

Do you have any other experience under DP terms of payment?


Discuss below your thoughts on DP terms of payment under exports and imports.




The above information is a part of Import Export Training course online

Other information about Export import tutorial

Difference between DDU and DAP


Disadvantages of LC (letter of Credit) to Importer.


Documents against Acceptance. - How reliable the terms of payment in exports


How Letter of Credit (LC) works


Advance payment the best way of terms for business


Mode of payments in international trade

Types of export containers
Measurement of export containers
Export Import Policy of India 2015-2020
MEIS, Merchandise Exports from India Scheme
SEIS, Service Exports from India Scheme
Merge your Commercial Invoice and Packing List for all your future exports
Export procedures and documentation

Types of Insurance Documents.

How to obtain GSP - Certificate of Origin?

How to obtain Phyto sanitary certificate. What is phytosanitary certification

 How to obtain waiver on detention/ demurrage on imported goods/container from Shipping company/CFS

How does a Running bond work?

 How does Bill of Lading work in DP payment terms?

How does Bill of Lading work in Sight LC

How does CENVAT Credit work?

Why need Certificate of Origin

 Why prefer exports?

 How many types of imports in India. Types of bills of Entry in India

How many types of shipping bills in export

 How to add Line number in Import General Manifest in Custom in India

 Import General Manifest (IGM)

Transferability of Bill of Lading

Transhipment - A redefinition





Thursday, January 30, 2014
Under DP terms of payment, the buyer drags to collect original shipping documents from his bank without making payment. bank gives the original documents without receiving payment & didn't giving the payment to beneficiary bank. what can do the exporter & their bank.
Thursday, January 30, 2014
if bulk containers seal without final weight & central excise final invoice with execs weight. what are the procedure for bulk container before weighment sealing.
Rakesh Kansal Says :
Sunday, May 04, 2014
dear Sir, I want to import goods and also want 60 days credit facility from the buyer. How and on which basis I can convince my buyer and what it is called in Incoterms. Regards
Surendran Kollerath Says :
Thursday, May 08, 2014
Hi Rakesh Kansal, You can arrange to open a Letter of Credit with 60 days credit period. You can also arrange payment terms as DA (documents against acceptance) also, if your supplier of goods agrees.
Johne591 Says :
Wednesday, November 05, 2014
I dugg some of you post as I cogitated they were very useful extremely helpful kedeagdagdee
Johnc72 Says :
Wednesday, November 05, 2014
Very good blog post.Really thank you! Fantastic. ddbcacbcdeeg
Sufy Says :
Wednesday, November 12, 2014
I'm planning to export flour. The buyer is insisting on 10% advance and 90% on BL on receiving flour at buyers port in good condition. What should I do and how should I convince him? Plz reply ASAP Sir. I'm in a fix.
Danny Edri Says :
Friday, November 14, 2014
Hi Acording DP you mean its risky to use the DP system because as seller I am not have any payments guarantee. I can send the original documents to the buyer bank and the bank can give it to the buyer without paying me. Are this correct? Thank you Daniel
Rahat Hossain Says :
Monday, November 24, 2014
IS it possible to get 50% LC guarantee and 50% DP payment for a single order? Thank you
Brindha S Says :
Wednesday, December 10, 2014
Hi I have an agreement with client for dispatching products on DP delivery against payment. However I have also committed to doing and paying for the customs clearance. My question is if the original documents are through bank then 1. How do i do the customs clearence 2. Is it possible for client to collect original documents from bank without paying for it? 3. Is it possible for the bank to delay payment to my bank even though the client has paid for it? Please advice
shyam thapa Says :
Thursday, July 02, 2015
Sir, I have some queries and doubts that I need to clarify before commencing export. 1- Can I start exporting goods only on advance payment from importer, as I don't have required capital for LC/DP or DA etc. 2- Can one set its own terms and conditions for the payments from the importer.
vigneshraj Says :
Sunday, July 26, 2015
Dear sir, I just received a order for supply of rice from a buyer he send me purchase order as irrevocable corporate purchase order,is it safe to do business accepting with this kind of payment method?and also please tell me that is it possible to get post shipment loan or any kind of loans for doing the business successfully,since i don't have more capital to invest.Please tell a good solution for my problem as early as possible. Thanks in advance, Regards, Vigneshraj
Raphael-Seraphin Kutota Basisa Says :
Thursday, November 12, 2015
Hi. I'm a seller for Used Clothing and Used Shoes for buyer internationally. I just landed a new customer who wants to purchase my goods using "DP OR CAD payable within 30 days after clearance." As I understand DP (The original documents will be exchanged with the full payment of Goods), but, He is asking additionally "30 days after Clearance" - this is the part that is not really clear with me: Is it secure? Is there an Insurance policy that He can purchase to protect me? Also, the CAD; I do not know what it means - please explain. Thank you.
vrushank Says :
Tuesday, February 09, 2016
Dear sir, we have sold cotton on 10% Advance and 90 % CAD basis. 1) We are telling our buyer that in consignee we will write to the order to bank details and in notify party buyers name and address.. 2) but buyer is telling to write buyers name in consignee as well as notify party.. so which option will be better 1 or 2.? In which case we will have title of goods in our name untill we have not received the payment into our bank account?
Rakesh Kumar Says :
Saturday, April 16, 2016
Great i have cleared lots of douts. could please provide i hindi language (export import process )
Kumar Dhiraj Says :
Thursday, April 13, 2017
Dear Sir, Your blog is very helpful to shipper/seller to get best knowledge of their issues. I have shipped the goods on DP basis. The goods are arrived at port but buyer do not custom cleared goods yet. Payment still not recd in my Bank. What to do now. Please help me. Regards, Kumar Dhiraj
QRP Says :
Monday, June 12, 2017
Bindu Says :
Monday, July 31, 2017
I want to know details of this online course
Saturday, September 16, 2017

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