Documents against acceptance (D/A)

Collection terms of payment that require the drawee to accept a draft or drafts drawn for future maturity at the presenting bank prior to receiving the accompanying documents. Typically, such collections include a document that restricts possession or ownership, thereby forcing the drawee to accept he draft in order to obtain the relevant goods. The presenting bank then conveys the acceptance at maturity date(s) to the drawer through its bank, and presents the draft for payment when due. There are two kinds of time drafts: those payable at a predetermined time from the day shown on the face of the draft (date drafts), and those payable at a predetermined time from the date(s) the draft was accepted (time-sight drafts). As the date shown on drafts normally corresponds to the date of the transport document, date drafts extend time from shipment. Time-sight drafts, however, are normally accepted once the goods have arrived and thereby extend time from arrival. The net difference, therefore, is which part finances the goods during transit time. The question of protest should be addressed when considering these payment terms.

Related entries