The D/A transaction utilize a term or time draft.
In this case, the documents required to take possession of the goods
are released by the clearing bank only after the buyer accepts a time
draft drawn upon him. In essence, this is a deferred payment or credit
arrangement. The buyer’s assent is referred to as a trade acceptance. D/A terms are usually after sight, for instance ―at 90 days sight‖, or after a specific date, such as ―at 150 days bill of lading date.‖ As with open account terms, there are some inherent risks in selling on D/A:
As with a D/P, the importer can refuse to accept the goods for any reason, even if they are in good condition.
The
buyer can default on the payment of a trade acceptance. Unless it has
been guaranteed by the clearing bank, the seller will need to institute
collection procedures and/or legal action.
