Is DP terms of payment safe in export business?


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



DINESH MISHRA: 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.

DINESH MISHRA: 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: 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: 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: I dugg some of you post as I cogitated they were very useful extremely helpful kedeagdagdee

Johnc72: Very good blog post.Really thank you! Fantastic. ddbcacbcdeeg

Sufy: 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: 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: IS it possible to get 50% LC guarantee and 50% DP payment for a single order? Thank you

Brindha S: 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 : 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: 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: 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: 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: Great i have cleared lots of douts. could please provide i hindi language (export import process )

Kumar Dhiraj: 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


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fariborz zolfaghari: we intend to purchase goods internationally under DP terms, but the shipper insists to insert her name under consignee in the pertaining b/l, is it safe to accept such thing?

Bharat Bamaniya: If buyer collect original documents from their banks, and refuse to pay amount of cargo, how does goes proceed to get full payment from them ?

AJAy paswan: How connect with genuine spices buyers

dhiral: I found your contact through researching on the internet. We are manufacturers and exporters of pharmaceutical equipment and machinery. One of our clients in the export business is asking for the payment method to be D/P (Document against payment). We are the sellers and they are the buyers. If we take the document against the payment method, we will be receiving 100% payment after the shipment of goods. But that will be a huge risk for us to dilute our working capital for one particular order to buy are the raw material and other resources. So we decide to tell them 60% advance payment and the remaining 40% payment against the document. Just wanted your help to know whether this is possible in the D/P payment method. Thank you very much in advance. Hope you have a great day ahead.

salon: First of all would like to thank you as i have been reading your blog and they have been very helpful to me as you have explained the procedure in very easy and simplified manner. As i am new in this export field and i am planning to start my new business, would really appreciate if you could clarify my doubt . Due to this lockdown situation in India no shipping companies are issuing original BL for shipment they are issuing express bl as we have our shipment on cash against document basis, well in this case there is no payment security as express bl has been issued the client can take the goods and might not make the payment. In regular cource we issue OBL and with other document we sent to their bank , but now i am help less and this shipment is not under LC basis. Can you guide us how can i export my shipment under cad basis with issuance of express bl.

anil: I very much appreciate your website-how to export & import in which your guidance is commendable. I want a little help from you that in terms of payment, there is a common practice by overseas sellers, to be 40%advance,30%on receipt of BL documents set and 30% on arrival of goods at destination port. But here in this country, mostly buyers do not agree with this term due to doubt that a registered company will also run away with their advance. So they ask that we import on our financial risk and supply them at lower price. One buyer agreed on the term of 'CAD through bank'.I also find it suitable in local dealing. I request you to give me some more details to understand it perfectly and what the agreement paper is required for this to submit, I want to have a format of that document to sign by both the parties. Secondly please guide me for a link in which I can find the HSN codes of spices & dry fruits so that I can find out the rate of import custom duty on them. Is there any app where these detailed HSN codes & Corresponding import custom duty are available.

manoj: Could you pls help us the provide your valuable feedback regarding my query. If we exported the cargo under Cash against Documents through my bank to buyer bank as Bill of Exchange. In that what should be mentioned in notify address in bill of lading ?

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