How is document against acceptance different than document against payment?

Thanks for invitation,

In a very precise wording:

Documents Against Payment (D/P):

Documents will be delivered to the account party only against payment.

Whereas;

Documents Against Acceptance (D/A):

Documents will be delivered to the account party only against the account party's acceptance of related draft to fall due on a future fixed maturity date.

 

Documents against Payment is an agreement under which an exporter instrucuts the presenting bank to hand over shipping and title documents to the importer only if the importer fully pays the accompanying bill of exchange or draft. (it is cash against documents _Documents against acceptance is also an agreement in which an exporter instructs a bank to hand over shipping and title documents to an importer only if the importer accepts the accompanying bill exchange or draft by signing it

Thanks for invitation,

I agree with earlier answers.

 

the Bank on importers side will release the documents of goods (Original Bill of lading) and handle to the Importer after he pays full amount in case of D/P,

or after he just signs the acceptance of payment terms in case of D/A

Both DA and DP are the terms of payment related to acceptance of shipping documents pertaining to each consignment from buyer’s bank. Under a DA terms of payment, importer accepts documents on the basis of an assurance to effect payment by accepting necessary bill of exchange. The importer collects shipping documents required to take delivery of imported goods from his bank after such assurance on payment at mutually agreed maturity date of payment.

 

In a DP payment terms, the imported need to effect payment against respective import consignment, before collecting documents for delivery of imported goods. Under a payment terms – Documents against Payments, the bank delivers documents required for import clearance only after receiving the value of goods from the importer. The buyer takes delivery of goods with the original transport document of title delivered by his bank after effecting payment under sale of goods mentioned in the document.

Thanks for invitation 

I agree with the answers provided 

In Commercial Term, we see term document against acceptance and document against payment. Here, Document against Acceptance act as an agreement where the exporter instructs its banks to handover the documents to importer only when the importer accepts the accompanying bill of exchange or the draft B/E by signing it. 

On the other hand, Document against payment act as the agreement where exporter instructs bank to hand over documents to importer only after getting the full payment as per Bill of Exchange.

D/P – Documents Against Payment

The D/P transaction utilizes a sight draft. Payment is on demand. After the goods are shipped, the exporter sends the sight draft to the clearing bank, along with documents necessary for the importer/buyer to obtain the goods from customs. The buyer has to settle the payment with the bank before the documents are released and he can take delivery of the goods. If the buyer fails or refuses to pay, the exporter has the right to recover the goods and resell them. On the surface, D/P transactions seem fairly safe from the seller’s perspective. However, in practice there are risks involved.

• The buyer can refuse to honor payment on any grounds.
• When the goods are shipped long distances, say from Hong Kong to the United States, it is usually impractical and too expensive for the seller to ship them back home. Thus, the seller is forced to sell the goods in the original country of destination at what is usually a heavy discount.
• In cases of shipments by air freight, it is possible that the buyer will actually receive the goods before going to the bank and paying for them.

D/A – Documents Against Acceptance

The D/A transaction utilizes a term or time draft. In this case, the documents required to take possession of the goods are released by the clearing bank only after the buyer accepts a time draft drawn upon him. In essence, this is a deferred payment or credit arrangement. The buyer’s assent is referred to as a trade acceptance. D/A terms are usually after sight, for instance “at 90 days sight”, or after a specific date, such as “at 150 days bill of lading date.” As with open account terms, there are some inherent risks in selling on D/A:

 

• As with a D/P, the importer can refuse to accept the goods for any reason, even if they are in good condition.
• The buyer can default on the payment of a trade acceptance. Unless it has been guaranteed by the clearing bank, the seller will need to institute collection procedures and/or legal action.

thank you for the invitation

i agree with the answers

I fully endorse the precise answer given by Suleman Abul Malik.

 

Both terms are an L/C payment terms.

Mr.Ashraf & Mr.Sulaiman have adequately answered your question.Tks

 

Acceptance doc. i.e certificate of acceptance confirms the quality and qty. of goods/services , delivery time  and other requirements (say warranty certificate/country of origin/name of manufacturer etc,)as mentioned in PO.

 Payment doc. includes an invoice/bill  as per PO format ( goods description, unit, qty.,  unit price, total price  and any discount thereof) supported by original signed copy of PO and certificate of acceptance other documentation like warranty conditions, copy of B/L in case of imported goods, country of origin etc. as mentioned in the PO.