International trade payments
Documentary Collection: Documents against Acceptance (D/A)
D/A (documents against acceptance) is a collection in which the bank releases the documents when the buyer accepts a time draft, and the buyer pays at maturity. The buyer gets the goods and trade credit, while the seller is left with only the accepted draft, close to the risk of selling on credit.
- Exporter risk
- Risk level 4/5
- Importer risk
- Risk level 2/5
- Cost
- ●●●○○
- Applicable rules
- D/A is governed by URC 522 when the collection instruction incorporates it; obligations on the draft are also subject to the bills of exchange or negotiable instruments law of the relevant country.
How it works
- The parties agree D/A and the draft tenor, for example 60 days after B/L date or 90 days after sight.
- The seller ships and prepares a time draft and the document set.
- The seller lodges the documents and a D/A collection instruction with the remitting bank.
- The remitting bank forwards them to the collecting bank in the buyer's country.
- The collecting bank presents the draft and the buyer accepts it for payment at maturity.
- The bank releases the documents and the buyer takes delivery.
- The collecting bank holds the accepted draft or returns it as instructed and advises the maturity date.
- At maturity the buyer pays and the bank remits the proceeds. If the buyer does not pay, the seller may have the draft protested if so instructed.
Parties involved
- Drawer: the exporter.
- Drawee: the importer, who accepts the draft.
- Remitting bank: the exporter's bank.
- Collecting or presenting bank: the bank in the importer's country.
- Avalising bank, if any: adds its aval to the draft, undertaking to pay if the buyer does not.
Exporter
Advantages
- An accepted draft is clear evidence of debt that can be enforced or discounted.
- Flexible, helping to compete with rivals offering deferred terms.
- Cheaper than a usance L/C.
Drawbacks
- Loses control of the goods as soon as the buyer accepts.
- Risk that the buyer does not pay at maturity.
- Hard to discount the draft without a bank aval.
Importer
Advantages
- Receives the goods first and has time to sell them before paying.
- No cash margin or L/C line needed.
Drawbacks
- An accepted draft is a strict legal commitment; late payment may lead to protest and reputational damage.
- The price may include the seller's financing cost.
Cost
On top of the usual collection fees there may be acceptance fees, maturity tracking fees, protest fees if the buyer does not pay and an aval fee if a bank guarantees the draft. If the seller discounts the draft for early cash, it pays discount interest for the remaining tenor.
Practice in Vietnam
D/A is used less than D/P in Vietnam because of its higher risk. Exporters usually accept D/A only with credit insurance or when the buyer's bank avalises the draft. Common mistakes are collection instructions that do not state from which date maturity is calculated, or that fail to ask the collecting bank to hold the accepted draft and advise the maturity date. Exporters must also track D/A receivables to meet the obligation to repatriate export proceeds.
Frequently asked questions
Is D/A safer than open account?
Slightly, because the seller holds a draft accepted by the buyer, which is clear evidence of debt and can be discounted. In substance, however, the seller still loses control of the goods before being paid.
What is a bank aval?
A bank's guarantee written on the draft itself, undertaking to pay if the drawee does not pay at maturity. A draft avalised by a strong bank is much easier to discount without recourse.
Can the buyer refuse to accept the draft?
Yes. The bank then withholds the documents and informs the seller, just as with a refusal under D/P.
This content is for general guidance and does not replace legal or banking advice for a specific transaction.
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