Compared to any other mode of payments in international trade, Documents against acceptance – DA terms of delivery – is the riskiest mode. However, some of the buyers in international trade seeks least period of credit with the supplier – say 30 days from the date of bill of lading etc., even though transit period of goods is more than 45 days. In such case, the buyer pays invoice value of goods to the seller before reaching goods to buyer’s place. If supplier enter in to a contract without knowing credit worthiness of buyer, collecting export proceeds under DA terms is quite risky job. Or after shipping goods, if the supplier realized that the buyer’s credit worthiness is not satisfactory, it’s hard job for an exporter to collect his invoice value of his goods shipped.
How can supplier collect invoice value of goods shipped in such situation.
As you are aware, once after shipping goods, you need to release original bill of lading from carrier and required to be sent to your overseas buyer without which the buyer can not take delivery of goods. Shipper also can arrange Seaway bill procedures or OBL surrender procedures. So in the example above, if the supplier does not release Bill of lading from the carrier, the cargo at destination port can not be taken delivery by buyer. If the credit period is 30 days from the date of bill of lading and the transit time of cargo is 60 days from date of shipment, supplier can hold bill of lading till he receives his amount of proceeds. Either shipper can release Bill of Lading from carrier and hold the same with him till overseas buyer pays or he can delay to release bill of lading from carrier. However, some of the carriers impose penal charges on late release of bill of lading.
If OBL not released or OBL not surrendered by shipper at load port, the buyer can not release goods at port of destination
.