Documents against acceptance are official documents that are used to authorize the presentation of a payout on a pending order. In exchange, the recipient of the payment is instructed to surrender any documents relevant to the title and shipping of the purchased items to the buyer. This process, sometimes known as a documentary collection, is often used as part of the import and export trade, with the bank for the buyer providing payment and the bank for the seller reciprocating with the release of a document of title and other key documents related to the transaction.
The general process of documents against acceptance, or D/A, is designed to allow for the orderly transfer of ownership from the seller to the buyer. This is especially important when the goods in question are being purchased from an international seller. In this scenario, the exporter issues a bill of exchange or a draft that the importer must accept and sign in order to move the transaction closer to completion. This action effectively makes it possible for the funds related to the sale to be transferred to the exporter. At that point in the process, the relevant documents that confirm ownership are released to the importer, providing him or her of legal proof that the purchased item is paid in full and is now the sole property of the buyer.
In many nations, having possession of the documents against acceptance are needed in order to claim the item from the carrier used to transport the goods to a domestic port of call, and also to clear the purchases through customs. Once it is verified that the buyer or importer has accepted the bill of exchange and that the time draft connected with the purchase has been properly drawn on the importer’s bank, the transaction is considered completed and the buyer can take possession of the purchased goods. At that point, the importer is free to make use of the goods in any way he or she sees fit, including selling the goods to a customer.
The underlying purpose for documents against acceptance is to protect the rights of both parties in the transaction. Should the shipped goods not match the shipping order initiated by the importer, refusing to sign the bill of exchange or authorize the draft to tender payment makes it possible to avoid paying for the incorrect order. At the same time, the documents against acceptance protect the seller from releasing goods to a buyer without any guarantee that payment will be tendered once the goods arrive at their intended destination.