Documents Against Payment
Category: Payments
Definition (plain English)
A documentary collection where the bank releases the shipping documents to the buyer only after the buyer pays the collection amount.
Why it matters commercially
D/P gives the seller more document control than open account, but it is not a bank guarantee and does not prevent buyer refusal, port delay, quality disputes, or destination-cost exposure.
Example
The seller used D/P at sight so the buyer had to pay before receiving the original bill of lading needed to release the container at destination.
Common mistake
Treating D/P like an LC instead of checking buyer willingness to pay, document accuracy, cargo value, storage exposure, and what happens if documents remain unpaid.
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