What is the procedure for collection of payments under document against payment (D/P)

The following procedure is followed for collection of payment under D/P i.e., Document against Payment.

1. The exporter sends the shipment and obtains shipping documents from the clearing and forwarding agent.

2. He prepares a sight draft on the importer for the value of the goods

3. The exporter submits the sight draft along with other shipping documents to his bank. The exporter’s bank acknowledges that all the documents as noted but the exporter are presented.

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4. The exporter’s bank sends the shipping documents and the draft along with a collection letter to a correspondent bank known as the remitting bank which is usually located in the importer’s country.

5. The remitting bank notifies to the importer upon receipt of the draft and the documents and require him to make the payment against the draft so that the documents are released to him.

6. All the documents including those establishing the importer’s title to the goods are released to him upon his payment of the amount of the sight draft.


7. The remitting bank sends the remittance to the exporter’s bank which, in turn, credits the account of the exporter.

8. In case, the importer doesn’t make the payment, the set of documents are returned to the exporter.

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