International Payments

Should an exporter who uses a documents against payment collection as a payment method attempt to retain control over the product that has been exported to a foreign buyer until such point that the U.S. exporter receives payment under the documents against payment collection?

Yes. It is generally not desirable for a seller using a documents against payment collection to forfeit control over product that a seller has shipped to a foreign buyer. This is because product control affords a seller some recourse in the event that a buyer does not pay the collecting bank. In such situation, the collecting bank will refuse to surrender the title documents to the buyer, thereby preventing the buyer from taking possession of the product that has been shipped and insulating the seller from a total loss. To retain control over product shipped to a buyer, a seller should avoid using a straight ocean bill of lading consigned to the buyer or an air waybill consigned to the buyer, as both of these documents give the buyer direct and immediate access to the product that the U.S. seller has shipped. The control available to a seller in a documents against payment collection transaction can also be undone by the seller's consent to the issuance of a steamship guarantee or airway release as both of these documents also give a foreign buyer direct and immediate access to product that a U.S. seller has shipped.

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