What is the difference between L/C and D/P payment
Post 1 of 6
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Please advise what is the difference between L/C and D/P payment ? Thanks in advance.
18 May 2007 22:35
Post 2 of 6
Replying to [HelenJollee]:
See EVERY TRADE TERM ... here ...
http://resources.alibaba.com/topic/22753/EVERY_TRADE_TERM_FOB_CIF_L_C_etc_.htm
See EVERY TRADE TERM ... here ...
http://resources.alibaba.com/topic/22753/EVERY_TRADE_TERM_FOB_CIF_L_C_etc_.htm
23 May 2007 00:26
Post 3 of 6
Replying to [HelenJollee]:
Please replay us the difference between advance payment andL/C?
Please replay us the difference between advance payment andL/C?
15 Jun 2007 23:03
Post 4 of 6
Replying to [HelenJollee]:
D/P means Documents (against) Payment, i.e. payment for the documents (essentially, invoice and transport documents) 'at sight'. 'At sight' means when the drawee is presented with the documents (he *sees* the demand) , and simulteneous demand for payment is made on him, he must pay (or refuse to pay). That single presentation to him is the first and last opportunity he gets (to pay/refuse). [Compare this with D/A bills.]
I need not explain what LCs are (this site has the details). An LC can be a SIGHT LC or a usance/time LC. Sight LCs are payable on demand. Bills under sight LCs are * bills. Under LCs 'available by aceptance' (usance LCs) you have to draw D/A bills.
Thus, D/P bills - as also D/A bills - can be drawn independently on the buyer, OR under an appropriate (sight or usance) LC.
D/P means Documents (against) Payment, i.e. payment for the documents (essentially, invoice and transport documents) 'at sight'. 'At sight' means when the drawee is presented with the documents (he *sees* the demand) , and simulteneous demand for payment is made on him, he must pay (or refuse to pay). That single presentation to him is the first and last opportunity he gets (to pay/refuse). [Compare this with D/A bills.]
I need not explain what LCs are (this site has the details). An LC can be a SIGHT LC or a usance/time LC. Sight LCs are payable on demand. Bills under sight LCs are * bills. Under LCs 'available by aceptance' (usance LCs) you have to draw D/A bills.
Thus, D/P bills - as also D/A bills - can be drawn independently on the buyer, OR under an appropriate (sight or usance) LC.
26 Jun 2007 20:51
Post 5 of 6
Replying to [getch]:
If the buyer pays to the seller 'in advance' (advance payment) then he has no NEED to send an LC to the seller once again, since payment has already been made!
![[em1]](http://img.alibaba.com/images/eng/style/icon/emoticons_smile.gif)
If the buyer pays to the seller 'in advance' (advance payment) then he has no NEED to send an LC to the seller once again, since payment has already been made!
26 Jun 2007 20:54
Post 6 of 6
Replying to [HelenJollee]:LC is basically a written undertaking by the issuing bank to guarantee that the payment will be honoured upon presentation of documents in compliance with the terms and conditions of the LC.
DP or Collections does not constitute an undertaking by presenting bank or accepting bank. Payment under * is absolutely at the discretion of the buyer. Bank is merely acting as an 'collecting agent'. Buyer may refuse payment. Under Collections guideline (URC 522), collecting bank can keep the documents up to a maximum of 60 days and shall return to the presenting bank should the documents remain unpaid. Collecting bank is not obligated to examine the documents.
Unlike LC, bank is only restricted to a maximum of 5 banking days to examine and decide whether to take up the documents or to refuse payment.
Comparatively, LC is much safer than Collections (D/P). However, D/P is also widely practiced in international trade especially between subsidiary companies or between parties that have established a good business relationships.
01 Jul 2007 20:21
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