GLOBAL SELLING BLOG

What is documents against acceptance (D/A)? Meaning, working, and example in international trade

Documents against acceptance (D/A) is a payment method in international trade. Learn how this payment method works and its benefits in the blog.

Documents against acceptance: Meaning, process, and example

The secure and timely payment of dues is a top priority in e-commerce exports. To establish trust between the exporter and purchaser, both parties should follow standardized processes for shipment delivery and payments. Documents against acceptance is one such payment method which allows businesses to streamline their payment terms and reduce risk.

This blog post discusses the definition, process, benefits, and potential drawbacks of documents against acceptance (D/A) to help exporters make informed decisions about payment methods.

What is documents against acceptance (D/A)?

Documents against acceptance (D/A) is a payment method used in international trade. The exporter sends shipping documents to their bank, which forwards them to the importer’s bank. The importer is notified and must accept a time draft (a promise to pay later) before receiving the documents needed to claim the goods. This allows the importer to get the goods before paying, while the exporter has a written commitment for future payment, reducing the risk of non-payment.¹

Process of documents against acceptance

The following is an overview of some of the key steps involved in a D/A transaction:

Step 1: Exporter ships the goods

The exporter ships the goods to the importer’s destination and prepares the necessary shipping documents, including the bill of lading, commercial invoice, and certificate of origin.

Step 2: Exporter submits documents

The exporter submits the shipping documents along with a time draft to their bank. The time draft specifies the payment due date, which is typically 30, 60, or 90 days after acceptance.

Step 3: Exporter’s bank sends documents to importer’s bank

The exporter’s bank forwards the documents and the time draft to the importer’s bank. The importer’s bank notifies the importer about the arrival of the documents.

Step 4: Importer accepts the time draft

The importer reviews the documents and signs the time draft. This acceptance legally binds the importer to pay the specified amount on the due date.

Step 5: Importer receives the shipping documents

Once the time draft is accepted, the importer’s bank releases the shipping documents. The importer can then use these documents to claim the goods from the shipping carrier.

Step 6: Payment is made

On the maturity date of the time draft, the importer makes the payment to the exporter’s bank, which then transfers the funds to the exporter.⁶

Advantages of documents against acceptance

The following are some key benefits of using D/A in international payment transactions:

Builds trust

D/A allows importers to defer payment while fostering trust and long-term business relationships.

Reduces financial burden

Exporters are guaranteed payment on the specified date. Importers can manage cash flow better by paying at a later date.

Secures payment

Exporters can retain control over the goods until the draft is accepted, reducing the risk of non-payment.

Simplifies documentation

Since banks act as intermediaries, exporters and importers can rely on the banks to ensure the time draft or bill of exchange is honored and the payment is made securely.

Disadvantages of documents against acceptance

The following are some key drawbacks of using D/A in international payment transactions:

Risk of default

If the importer fails to pay on the due date, the exporter may face financial losses.

Delayed payment

Exporters must wait for the draft to mature, which can affect their cash flow.

Dependence on banks

The process relies heavily on banks, which may charge fees for their services.

Limited legal recourse

In case of disputes, recovering payment can be time-consuming and costly.⁴

Example of documents against acceptance

Imagine company A, a clothing company in the US (importer), wants to buy a shipment of t-shirts from company B, a manufacturer in India (exporter). They agree to use a D/A arrangement. That means:

● Company B ships the t-shirts and sends the shipping documents and a time draft or bill of exchange to their bank.
● The bank sends these documents to Company A’s bank.
● Company A signs the bill of exchange, agreeing to pay in 60 days.
● The bank releases the shipping documents to company A, allowing them to receive the t-shirts.
● Exactly 60 days later, company A pays company B.

Tips for using documents against acceptance

The following are some factors to consider before opting for a D/A transaction:

Assess buyer’s creditworthiness

Before opting for D/A, verify the importer’s financial stability and creditworthiness. D/A is suitable when there is confidence in the buyer’s capability to make payments.

Use trusted banks

Work with reputable banks for smoother transactions. Also ensure that the transaction is straightforward and the service fees are clearly outlined.

Clearly define payment terms

Specify payment duration and conditions in contracts to make sure that payment is done on time. Track due dates to ensure timely payments

Monitor political and economic conditions

Consider the economic and political conditions of the receiving country before choosing D/A terms. Countries without restrictive foreign exchange controls can be favorable for the exporter.⁵

Documents against acceptance (D/A) vs letter of credit (LC)

Aspects

Documents Against acceptance (D/A)

Letter of credit (LC)

Terms of fulfillment

Buyer gets shipping documents and can receive the goods. Payment is made on an agreed upon future date.

Buyer makes the payment upon fulfillment of conditions specified in the letter of credit.

Bank Guarantee

Bank does not guarantee payment.

Bank guarantees payment.

Payment Security

Moderate payment security, depends on importer’s credit.

Bank guarantee provides high payment security.

Bank involvement

Limited bank involvement.

High bank involvement.

Cost

Comparatively lower cost.

Higher cost due to bank fees.

Risk for Exporter

Higher risk for the exporter because there is no bank guarantee.

Lower risk due to bank guarantee.

Payment Timeline

Deferred.

Immediate or deferred.

Suitable For

Trusted trade relationships and smaller transactions.

New, high-risk, and high-value trade transactions.⁶

Conclusion

Documents against acceptance (D/A) is a valuable payment method in international trade, offering a balance between trust and security. By understanding the process, advantages, and disadvantages of D/A payment terms in export, businesses can make informed decisions and optimize their international trade operations. For exporters looking to expand their global reach, e-commerce export programs like Amazon Global Selling offer tools and resources to simplify cross-border trade.

Amazon Global Selling: Easy e-commerce exports and hassle-free shipping

If you are a business owner and you want to sell your products to the world, Amazon Global Selling enables you to list and sell ‘Made in India’ products on 18 Amazon global marketplaces. As an e-commerce export program, Amazon Global Selling provides support and guidance at every step of your export journey, connecting you to Amazon’s Service Provider Network for tailored compliance, payments, and logistics support.

Registered sellers can choose to ship their products by themselves through Merchant Fulfilled Network (MFN) or they can opt for fulfilment by Amazon (FBA) and outsource order fulfilment to Amazon including packing, storage, delivery, and returns. Amazon Global Selling simplifies the process of international shipping to the world, helping businesses navigate customs and reach a vast audience.

Frequently Asked Questions

1. Are documents against acceptance safe?

D/A transactions are relatively safe but carry a risk of buyer default since banks do not guarantee payment. Exporters should assess buyer credibility before using this method.

2. When should one use documents against acceptance?

D/A is suitable for trusted business relationships where importers need credit periods. It is best when buyers have strong financial stability and a good payment history.

3. Difference between documents against acceptance and open account payment?

In D/A, the importer must accept a time draft before receiving documents, offering some payment security to the exporter. In an open account payment, goods are shipped, and payment is made later without any bank-controlled documents, increasing risk for exporters.

Published on April 16, 2025.

Sources:

1. https://www.cbibank.com/wiki-en/what-is-d-a-documents-against-acceptance/
2. https://www.wallstreetmojo.com/documents-against-acceptance/
3. https://www.abc-amega.com/articles/d-p-d-a-and-their-use-in-international-sales-transactions/
4. https://www.edc.ca/en/article/different-payment-terms.html
5. https://www.credlix.com/blogs/international-trade-documentary-collection
6. https://www.credlix.com/blogs/international-trade-documentary-collection

Related blogs