What do you expect by Documents against Payments?

Documents against Payment (DP/DAP) with Merchant Finance and Guarantee Corporation (MFG) in Thailand are a foreign exchange payment phrase.  It depends on an instrument known as bill of exchange or draught, commonly used in foreign trade.

In this time, the documents under consignment are shipped to the purchaser only when the purchaser's bank collects payment of the products. The supplier ships the items and submits shipping documentation to the Bank importers with orders to release the importer's documents against payment, if the importer has to pay the exporter whenever the documents are issued from the Bank.  Only after the importer has paid the bill will the receiving bank hand over the shipping papers, such as the title document.

This is document against payment, in Thailand Corporation, transaction is very common. Nowadays, through this payment system, general individuals are purchasing items.

In this scheme, only on payment of the goods can the receiving bank issue the documentation to the importer. The receiving bank transmits the funds to the remitting bank for transfer to the exporter until the payment is received.

Simply put, Document against Payments is an agreement in which a seller orders the presenting bank to issue the purchaser's shipping and title documents only if the importer pays the corresponding exchange bill or draught entirely.

Now know about Documents Collection with Merchant Finance and Guarantee Corporation

Documentary collection is a type of trade financing in which an importer pays the exporter for his goods after the banks of the two parties exchange the documents demanded. In return for documents issuing the title of the imported items, the exporter's bank receives funds from the importer's bank, usually after the goods are delivered at the importer's location.

Documentary collection is so named because in return for the shipping papers, the exporter collects payment from the importer. For the buyer to clearance the supplies via customs and take delivery, shipping documents are needed. They contain a trade invoice, a certificate of origin, a certificate of insurance and a packaging list. The trade bill or draught, which is a formal payment order from the exporter to the importer, is a crucial document in a documentary series.

Documentary collection, including letters of credit and advance payment, is less frequent than other forms of trade financing. It is less costly but still much riskier than other approaches, because it is normally restricted to transactions between parties that have formed faith or are based in countries with good legal structures and contract compliance.

Depending on where the payment is provided to the exporter, documentary collections divide into different fundamental categories:

·         Documents against payment allow the importer on sight to pay the face value of the draught. In other terms, when the customer is presented with the draught, and before any shipping papers are issued, payment must be made to the bank. Because of the decreased risk for the vendor, this is the most common method of documentary compilation.

·         Documents against acceptance enable the buyer to pay on a given date. The bank transfers the papers to the purchaser after the purchaser approves the time draught.

 

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