International Payments

How does documents against acceptance collection differ from a documents against payment collection?

The differences between a documents against acceptance collection and a documents against payment collection are as follows: (a) a documents against payment collection transaction involves a sight draft (payable upon presentation), whereas a documents against acceptance collection transaction involves either a date draft or a time draft; (b) in a documents against payment collection transaction a buyer has to pay the sight draft to receive the title documents to a shipment, whereas in a documents against acceptance collection transaction, a buyer merely has to accept a date draft or a time draft and promise payment at some future date in order to gain access to the title documents and the products that the seller has shipped to the buyer; (c) since the buyer has gained access to the products by accepting a date draft or a time draft, the seller loses control over the products and has little protection if the buyer, for whatever reason, is unable to make payment when the accepted draft matures and becomes payable. The acceptance of a date draft or time draft by the buyer therefore renders a documents against acceptance collection transaction equivalent to an "Open Account" transaction (detailed below), albeit with a written promise to pay.

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