Problem description:
What exactly does DP mean? What's the use? How to deal with it?
Analysis:
D/P, that is, bank collection, means that you give the documents to your bank, and your bank sends them to the other bank (usually the bank designated by the customer). The other bank will inform the guest after receiving the documents, and the guest will pick them up after paying.
Operation process of D/P payment
As a kind of collection business, D/P is divided into two basic transaction types: D/P at sight and D/P at future ... At present, in international trade settlement, all parties follow the Uniform Rules for Collection of the International Chamber of Commerce (currently applicable to ICC publication No.522, abbreviated as URC522 in practice) to handle related D/P business.
The operating procedures of D/P at sight and forward are basically as follows:
(1) The buyer and the seller agreed in the contract to settle by D/P, which is the basis; (2) The seller prepares all documents after the delivery of the goods (including freight documents such as bill of lading and commercial documents such as bills of exchange and invoices); (3) The seller requires the foreign exchange bank to handle D/P collection, fill in collection instructions and deliver all documents; (4) The seller's foreign exchange agent accepts the collection instruction and all documents after examination, and issues a receipt to the seller; (5) The seller's agent bank sends the complete set of documents to the buyer's agent bank in two batches (the bank can be designated by the seller's bank or by the seller in the collection instruction, the latter is mostly); (6) After receiving all the documents, the buyer's bank will present the documents to the buyer; (7) The buyer will pay the money to the buyer's bank (in the case of D/P at sight), or the buyer will check the documents, accept and pay when due (in the case of D/P at forward); (8) The buyer's bank will hand over all documents to the buyer after receiving the payment from the buyer; (9) The buyer's bank will transfer the money received to the seller's bank, and the seller's bank will transfer it to the seller.
In D/P business, banks do not review the contents of documents, and they do not undertake payment obligations. Banks only provide services such as forwarding documents, handing in documents and collecting payment.
In the D/P export business, exporters should pay attention to the following important issues:
At 1. In D/P business, the exporter's guarantee of payment is the importer's credit, so paying attention to the importer's payment ability and business reputation is an important prerequisite for obtaining payment.
2. After the goods are delivered, during the circulation of documents from the exporter to the importer, attention should be paid to controlling the goods through the control of documents, and the documents should be firmly controlled before the importer pays.
3. In practice, problems often occur in the transfer of documents, that is, the exporter to the bank, the seller's bank to the buyer's bank, and the buyer's bank to the importer. Therefore, to control these handover points well, the documents should be circulated according to the specifications.
4. Try to instruct the bill of lading. This can control the goods by controlling the bill of lading.
D/P risk
Although in both cases, the importer's bank can only deliver the documents to the importer after the importer pays, so the legal risks in these two cases should be said to be the same, but because of the different risks in business practice, it is more risky for the exporter to deliver the documents directly to the bank designated by the buyer.
According to the Uniform Rules for Collection of the International Chamber of Commerce, the normal collection practice is that the export company entrusts its agent bank to handle the collection, and the collecting bank and the collecting bank entrusts the importer's agent bank or the bank designated by the importer to handle the presentation payment. However, in the collection business, the collecting bank has no obligation to accept the entrustment of the exporter. In other words, the bank has the right to refuse to handle the collection instruction after receiving it.
The exporter handles the collection through its agent bank (collecting bank), and the collecting bank arranges the collecting bank (whether designated by the importer or not, whether it is the importer's agent bank) to handle the presentation and collection on its behalf. The collecting bank bears the risks to the exporter in the process of mailing the collection documents. Moreover, if there are any problems in the process of presenting payment, the collecting bank will make full and effective contact with the collecting bank.
On the contrary, if the exporter mails the documents by himself, on the one hand, the risk of damage or loss of the documents in the mailing process will be borne by the exporter himself; On the other hand, the exporter is not the current customer of the importer, and the importer is also worried about how to manage the collection business, which leads to the bank's failure to incorporate the normal management procedures when handling the collection business and needs special treatment.
In addition, exporters are often unable to judge the accuracy of bank information provided by importers, such as bank name and address. If the name and address are wrong, it may cause others to receive all the documents and may cause others to pick up the goods with the original documents. In the case of deliberate fraud by exporters, direct mailing of documents will undoubtedly bring great convenience to fraudsters.