D/P and D/A Collections — URC 522 and Document Release Practice

What Are D/P and D/A Transactions (Collections)? Practical Application of URC522 and Payment vs. Acceptance Delivery

D/P (Documents against Payment) and D/A (Documents against Acceptance) are collection methods where the exporter presents shipping documents to the importer through banks, delivering commercial documents in exchange for payment or acceptance of a bill of exchange.

D/P is called "payment delivery," where documents are released after the importer makes payment. D/A is called "acceptance delivery," where documents are released once the importer accepts a time draft, with actual payment made on the maturity date.

Unlike L/C transactions, banks do not guarantee the importer’s payment in D/P or D/A collections. Banks act according to the Collection Instruction by presenting documents and requesting payment or acceptance, but do not guarantee the importer’s creditworthiness, cargo quality, contract performance, or final payment collection.

Therefore, in D/P and D/A transactions, it is necessary to design the process comprehensively—not only the bank procedures but also management of the Original B/L, transit time until cargo arrival, issuance of D/O, importer’s credit, remittance regulations, handling of unpaid cargo, storage fees, demurrage, returns, local resale, and trade insurance.

Scope Covered in This Article

Item	Contents Covered in This Article	Contents Covered in Other Articles
D/P and D/A	Conditions for document delivery, payment timing, credit risk, and relationship with cargo pickup	General payment settlements are covered in "Types and Selection of Trade Payment Methods"
URC522	Conditions of application for the 1995 revision, key Articles, and the role of banks	Overview of ICC rules is covered in "What Are the Uniform Customs and Practice for Documentary Credits (UCP600)"
Collection vs. Purchase	Differences between bank collection services and discounting of export drafts and shipping documents	Export finance, draft discount conditions, and buyback claims are covered in separate articles
Collection Instruction	Contents, D/P and D/A instructions, fees, interest, refusal handling, and Case of Need	Bank-specific collection instruction forms and completion guidelines should be checked from individual banks’ guidance
Original B/L	Document management via banks, relation to D/O issuance and cargo pickup	Endorsements and types of B/L—Bearer, Order—are covered in "Bill of Lading"
Payment or Acceptance Refusals	Initial responses after bank notification, cargo location confirmation, and handling strategy	Litigation, arbitration, and enforcement issues are subject to local legal advice
Logistics Costs	Demurrage, detention, CFS/warehouse storage fees, and return shipping costs	Calculation methods for individual charges are covered in related cost articles
Insurance	General trade insurance relevant to collection transactions; distinctions from Export Bill Insurance and marine cargo insurance not covered by collection	Specific underwriting eligibility, compensation rates, exclusions, and claims are subject to each insurance policy

Purpose and Background of D/P and D/A Collections

D/P and D/A collection methods involve the exporter presenting shipping documents to the importer through banks rather than directly, enabling some level of document control while recovering payment.

In D/P, the exporter withholds commercial documents until payment is made, allowing control over cargo release provided the Original B/L is securely managed.

Conversely, in D/A, commercial documents are released once the importer accepts a time draft, before actual payment. The importer may sell the cargo before paying, placing the exporter in a position of unsecured or limited credit extension until maturity.

Thus, D/P and D/A are not mere methods of forwarding bank documents. They are payment methods combining sales terms, importer credit, transit time, B/L types, local import regulations, cargo preservation conditions, and post-refusal cargo handling prospects.

Differences between D/P and D/A

Comparison Item	D/P	D/A	Exporter’s Decision Points	Importer’s Position
Japanese Name	Payment Delivery	Acceptance Delivery	Do not confuse payment with acceptance	Acceptance in D/A is not immediate payment
Document Release Conditions	After payment	After acceptance of the draft	State conditions clearly in Collection Instruction	Cannot receive documents until conditions are met
Payment Collection Timing	Generally before document release	At maturity after document release	Uncollected balance remains until maturity in D/A	May dispose of cargo before payment in D/A
Original B/L Management	Often retained by bank until payment	Released to importer after acceptance	Confirm if B/L form suits cargo control needs	Proceed to D/O issuance after B/L receipt
Main Credit Risks	Payment refusal, delays, cargo retention	Nonpayment at maturity, bankruptcy, remittance restrictions	Generally higher credit risk in D/A	D/A can be more favorable for cash flow
Post-Arrival Cargo Issues	Cargo may be detained unpaid	Uncollected payment after cargo pickup	Prepare handling plan for refusals before contract	In D/P, cargo may not be released without payment
Suitable Transactions	Transactions with some credit but no prepayment requirement	Long-term credit relations with acceptance of credit	Check financial status and country risk beyond business history	Reflect required credit period in trade terms

D/P is sometimes described as safer than D/A, but unpaid payment by the importer will result in no collection in either case. If the cargo has already arrived at the import port, storage fees and demurrage may increase, possibly imposing cargo handling costs on the exporter.

In D/A, the accepted draft provides the exporter with a possible legal basis for claims, but acceptance is not a bank guarantee—it remains the importer’s payment promise. If the importer becomes insolvent, loses assets, or if remittance restrictions occur, recovery at maturity may fail.

Differences Between Collection and Purchase

Comparison Item	Collection	Purchase (Discounting)	Key Contract Conditions to Confirm	Main Risks
Bank’s Basic Role	Present documents and request payment or acceptance	Examine export drafts and shipping documents, advance funds to exporter	Determine whether it is a collection request or purchase application	Confusing terms can lead to misunderstanding funding timing
Exporter’s Cashing Timing	Generally after importer payment	At execution of purchase by bank	Purchase date, interest, fees, foreign exchange conditions	Purchase is not always absolutely confirmed
Bank Credit Extension	Generally not provided	Provided based on bank’s credit review	Credit limits, importer credit, country risk	Bank may refuse to purchase
Nonpayment Handling	Exporter handles collection and cargo disposal	Check buyback terms and redemption claims	Recourse rights, buyback clauses, guarantees	Claims can revert to exporter even after purchase
Export Bill Insurance	Drafts presented for collection are excluded	Drafts purchased by bank and meeting requirements may be insured	Whether bank purchase occurred, notice to NEXI, insurance contract	Do not judge insurance eligibility by D/P or D/A terms alone
Relation to URC522	Applies when included in Collection Instruction	May apply to overseas collection after purchase, but purchase contract is a separate agreement with the bank	Separate collection rules from financing/purchase conditions	URC522 does not guarantee purchase price or Export Bill Insurance

Collection refers to the bank conducting collection operations; purchase means the bank providing funding. Submission of shipping documents to the bank does not mean the exporter immediately receives funds.

It is necessary to confirm from contracts, applications, calculation sheets, and agreements with the bank whether documents are accepted as "collection" or funds are advanced as "purchase," and whether buyback claims apply post-purchase.

The terms D/P and D/A indicate conditions for document delivery to the importer; whether the exporter’s bank treats documents as collection or purchases drafts is a separate matter.

Therefore, under D/P or D/A terms, banks may still purchase drafts. However, in the method primarily covered in this article, where the exporter submits documents as collection requests, Export Bill Insurance cannot be used.

What Is URC522?

URC522 is the 1995 revision of the ICC's Uniform Rules for Collections, published as ICC Publication No. 522, in effect since January 1, 1996.

URC522 governs parties, Collection Instruction, document presentation, D/P and D/A, payments, fees, protest, Case of Need, refusal notices, and other collection-related rules for banks handling collections.

However, URC522 does not automatically apply to all collections like law. To apply URC522, the Collection Instruction must explicitly incorporate compliance with URC522.

Even if URC522 applies, mandatory local laws, foreign exchange regulations, sanctions, import restrictions, negotiable instruments law, warehouse and port operators’ liens, and similar may take priority.

Main Situations Where URC522 Applies

Situation	Main Issues under URC522	Documents to Confirm in Practice	Notes
D/P Collection	Conditions for releasing commercial documents against payment	Collection Instruction, bill of exchange, B/L	Clearly instruct not to release documents before payment
D/A Collection	Conditions for releasing documents against acceptance of a time draft	Collection Instruction, time bill of exchange	Nonpayment risk after acceptance rests with the exporter
Collection of Commercial Documents Only	Documentary Collection without financial drafts	Invoice, B/L, other commercial documents	May still be considered collection without drafts
Collection of Fees and Interest	Handling when importer refuses fees or interest	Collection Instruction, bank fee schedule	Specify whether waiving fees/interest is permitted
Refusal of Payment or Acceptance	Bank notification and subsequent document handling	Non-payment notice, non-acceptance notice	Exporter should promptly issue additional instructions after bank notice
Protest	Whether the bank is requested to perform legal protest procedures	Collection Instruction, bill of exchange	Bank has no obligation without specific instructions
Case of Need	Scope of authority granted to local agents	Collection Instruction, power of attorney	Bank will not act without expressly stated authority
Electronic Presentation	Application of eURC when using electronic records	Electronic collection instructions, electronic records	Confirm conditions for eURC as well as paper-based URC522

URC522 Application Requirements

Requirement	Details to Confirm	Supporting Documents	Risks if Unclear
Statement of Compliance with URC522	Whether Collection Instruction states URC522 applies	Collection Instruction	Cannot assume URC522 applies as a default
Complete and Clear Instructions	Are D/P or D/A terms, amount, currency, and document conditions clearly stated?	Collection request, Collection Instruction	Bank may act differently than intended
Identification of Parties	Are Principal, Remitting Bank, Collecting Bank, Presenting Bank, Drawee identified?	Collection Instruction, bank notices	Unclear notification or presentation destinations
Presentation Address	Is importer’s name, address, and presentation location correct?	Sales contract, invoice, Collection Instruction	Delays or document return may occur
List of Documents	Are all enclosed documents types and counts specified?	Collection Instruction, document cover letter	Difficult to identify missing documents
Instructions After Refusals	Are policies for notification, custody, and return on non-payment/non-acceptance given?	Collection Instruction	Cargo retention and cost increases may result
Compliance with Mandatory Laws	Are local negotiable instruments law, foreign exchange, import regulations respected?	Local laws, bank responses, legal opinions	May prevent execution of instructions under URC522

Matters Not Directly Resolved by URC522

Item	Position in URC522	Actual Verification Source	Practical Measures
Importer’s Payment Ability	Not guaranteed	Credit rating agencies, banks, export credit agencies	Set credit limits and payment terms
Quality and Quantity of Goods	Not covered by bank guarantee	Contracting parties, inspection companies, surveyors	Prepare contract specifications and inspection certificates
Sales Contract Breach	Does not judge disputes under sales contracts	Contracting parties, lawyers, arbitration bodies	Confirm governing law and dispute resolution clauses
Storage and Insurance of Cargo	Not inherently the bank’s responsibility	Freight forwarders, warehouses, insurance companies	Decide emergency contacts before rejection
Local Resale and Return	Not a rule to regulate cargo disposition	Exporter, local agents, customs brokers, lawyers	Confirm customs, import regulations, and ownership
Compensation for Non-Collection of Payment	Not an insurance scheme	NEXI, insurance companies, financial institutions	Consider applicable trade insurance before commencing transactions
Application of Export Bill Insurance	Separate issue from URC522 applicability	Purchasing bank, NEXI	Confirm whether it is collection instruction or bank purchase, and organize accordingly

Main Articles of URC522 and Their Practical Significance

Article	Subject	Practical Significance	Points to Confirm for D/P and D/A
Article 1	Application of URC522	Applies when URC522 is incorporated into the Collection Instruction	Confirm instruction content not only in collection request but also between banks
Article 2	Definitions of Collection and Documents	Differentiates financial documents, commercial documents, Clean Collection, Documentary Collection	Distinguish between bills of exchange and commercial documents such as B/L
Article 3	Parties to the Collection	Defines Principal, Remitting Bank, Collecting Bank, Presenting Bank, Drawee	Collecting Bank and Presenting Bank are not necessarily the same
Article 4	Collection Instruction	Banks must follow clear instructions and are not obligated to search for instructions in documents	Specify D/P or D/A, amount, documents, fees, post-rejection measures
Article 5	Presentation	Clarifies the presentation procedure and timeframe for importer’s action	Do not rely on ambiguous deadline expressions
Article 6	Sight / Acceptance	Sight drafts require immediate payment presentation; term drafts require presentation of acceptance and later payment at maturity	Clearly specify whether sight or term draft
Article 7	Delivery of Commercial Documents	If uncertain whether D/A or D/P applies for term drafts, do not deliver documents until payment	Clearly state Documents against Acceptance or Payment
Article 10	Differentiation between Documents and Goods	Banks are not inherently responsible for receipt, custody, or insurance of goods	If goods are sent to banks, confirm prior consent
Article 12	Verification of Received Documents	Banks verify apparent completeness of documents but are not obliged to perform further examination	Exporter should verify document consistency
Article 13	Disclaimers Regarding Document Validity etc.	Banks do not guarantee accuracy, authenticity, legal effect, or quality of goods	Bank verification alone may not prevent claims of document deficiencies by importer
Article 16	Transfer of Collection Amounts	Transfer funds promptly according to instructions	Confirm fees deducted and remittance method
Articles 17 & 18	Local Currency and Foreign Currency	Payments for document delivery require acceptable and transferable currency	Confirm foreign exchange controls and convertibility
Article 19	Partial Payment	Partial payment under Documentary Collection requires explicit authorization	Clarify whether documents are released upon partial payment
Article 20	Interest	If waiver of interest is not allowed, explicitly state this	Include interest rate, period, and calculation basis
Article 21	Fees and Charges	Indicate whether charges to importer can be waived	Consider clear instructions like “Do not waive charges”
Article 22	Acceptance of Drafts	Presenting Bank verifies form of acceptance but not authenticity of signature or authority	Authority for signature must be confirmed separately
Article 24	Protest	Specific instructions required if protest or similar is necessary	Confirm local legal requirements, deadlines, and costs in advance
Article 25	Case of Need	If a local agent is appointed, their authority must be clearly and fully stated	Define authority scope on discounts, storage, returns, etc.
Article 26	Bank’s Notifications	Sets notification methods and subsequent instructions for payment, acceptance, non-payment/non-acceptance	Provide prompt post-rejection instructions for handling documents

When explaining the bank’s duty of document examination, it is inadequate to rely solely on Article 10, which mainly concerns the relationship between the goods and the bank.

Bank actions based solely on Collection Instruction are prescribed by Article 4; presenting documents after matching received documents to a checklist and appearance is described in Article 12; and non-guarantee of accuracy, authenticity, legal effect of documents and cargo quality is covered in Article 13.

Parties under URC522

Party	URC522 Term	Basic Role	Practical Notes
Exporter	Principal	Delegates collection processing to bank	Has final interest in sales contract, documents, and cargo handling post-rejection
Exporter’s Bank	Remitting Bank	Receives collection from Principal and sends Collection Instruction	Accurately reflects exporter’s instructions in interbank instructions
Collecting Bank	Collecting Bank	A bank involved in collection other than Remitting Bank	Not necessarily the bank that presents documents to the importer
Presenting Bank	Presenting Bank	The Collecting Bank that presents documents to the Drawee	Delivers documents after payment or acceptance conditions are met
Importer	Drawee	Receives document presentation as per Collection Instruction	May refuse payment or acceptance
Local Agent	Case of Need	Conducts local actions limited to non-payment or non-acceptance cases	Bank will not act without explicit authority in Collection Instruction

Collecting Bank and Presenting Bank are distinct concepts under URC522 Article 3. The same bank on the import country side may perform both roles, but sometimes different banks handle collection and presentation.

Therefore, exporters should confirm which banks handle collection processing, which present to the importer, and from where any rejection notices will be issued, rather than just treat all as the “import country bank.”

Differences between Collection Request and Collection Instruction

Documents submitted by exporters to the exporter’s bank are often called “Collection Request” or “Export Bill Collection Request” in Japanese banking practice.

In contrast, Collection Instruction governed directly by URC522 Article 4 is the instruction sent from the Remitting Bank to the Collecting Bank. It is also referred to in practice as the Collection Order.

Even if the exporter’s collection request includes correct instructions, if they are not accurately reflected in the interbank Collection Instruction, the importer-side bank may not directly confirm the exporter’s intentions.

Items to Confirm in Collection Instruction

Item to Confirm	Contents	Main URC522 Basis	Potential Problem if Unclear	Practical Response
Applicable Rules	Subject to URC 522, etc.	Articles 1, 4	Uncertainty about whether URC522 applies	Confirm governing rules with the bank
Collection Conditions	D/P or D/A	Articles 4, 7	Unclear timing of document delivery	Specify Documents against Payment or Acceptance
Amount and Currency	Collection amount and specified currency	Articles 4, 17, 18	Issues in conversion, remittance, or short payment	Confirm payment currency and remittance feasibility
Document List	Number and type of documents such as B/L, invoice, packing list	Articles 4, 12	Difficulty identifying missing documents	Specify number of originals and copies
Bill Conditions	Sight, term, start date, maturity date	Articles 6, 7, 22	Miscalculation of maturity date	Use expressions like after sight, after B/L date appropriately
Fees	Who bears them and whether waivable	Article 21	Uncertainty if documents are released on importer refusal	Include explicit instructions such as Do not waive charges
Interest	Interest rate, period, calculation basis, waivers	Article 20	Ambiguity regarding handling of interest refusal	Specify calculation basis such as 360 or 365 days
Partial Payment	Acceptance of partial payment	Article 19	Risk of releasing documents upon partial payment	Explicitly state if partial payment is not permitted
Rejection Notification	Method, recipient, required information	Article 26	Delayed decision on cargo handling	Specify fast notification methods like SWIFT
Protest	Whether to make protest or similar certificate	Article 24	Potential loss of procedures needed to protect rights	Confirm local law, deadlines, and give specific instructions
Case of Need	Agent name, contact info, authority	Article 25	Local agent unable to act effectively	Individually define authority regarding discounts, storage, returns
Post-Rejection Document Handling	Storage, return, continued presentation	Articles 4, 26	Long-term document retention	Decide responsible internal approver in advance

Typical Expressions in Collection Instruction

Example Expression	Meaning	Main Use	Notes
Documents against Payment at sight	Sight D/P	Deliver commercial documents against payment	Specify payment amount, currency, and fees clearly
Deliver documents against payment	Deliver documents after payment	Basic instruction for D/P conditions	Confirm what defines payment completion
Documents against Acceptance 60 days after sight	D/A with 60 days after sight	Term collection starting from presentation date	Record presentation and maturity dates
Documents against Acceptance 60 days after B/L date	D/A with 60 days after B/L date	Term collection starting from B/L date	Credit period may partially elapse at document presentation
Documents against Acceptance 60 days after invoice date	D/A with 60 days after invoice date	Transaction starting from invoice date	Be cautious where invoice date and shipment date differ
Do not waive charges	Do not allow waiver of collection fees	Enforce strict importer cost bearing	Document delivery may be delayed if importer refuses
Interest may not be waived	Interest waiver not permitted	Require interest collection for term transactions	Interest rate, period, and calculation basis are also required
Advise non-payment or non-acceptance without delay by SWIFT	Notify non-payment/non-acceptance promptly via SWIFT	Emphasize early action after rejection	Designate additional responsible persons for post-notification
Do not protest unless otherwise instructed	Do not protest unless given further instructions	Avoid unnecessary costs	May be inappropriate if local law requires protest

The actual wording used may vary depending on the bank’s prescribed forms, sales contracts, the bill laws in the transaction country, banking practice, and exporter’s bank handling policies.

Exporters should not create wording solely on their own but explain transaction terms to the bank, confirming how these will be reflected in the bank’s collection request form and interbank Collection Instruction.

Cautions Regarding D/P at Sight and Term D/P

D/P is generally used as D/P at sight, meaning payment upon presentation.

The practice of using term bills while withholding commercial documents until payment at maturity is sometimes called term D/P or D/P usance. However, URC522 Article 7 recommends careful handling of situations involving term drafts where document delivery is delayed until payment, including those involving term bills of exchange.

If the cargo arrives before the due date, the importer may not be able to obtain the Original B/L before the payment deadline and thus may be unable to collect the cargo. During this period, demurrage, CFS storage fees, warehouse charges, and cargo deterioration can occur, so it is necessary to carefully confirm the alignment of D/P with the transport duration.

Expression of Due Dates in D/A

Due Date Expression	Starting Point	Concept of Due Date	Exporter’s Points of Attention	Documents to Confirm
At sight	Upon presentation	Payment is generally immediate	Often used in D/P	Presentation notice, bank records
60 days after sight	Date of presentation of the draft	60 days after presentation date	Delayed presentation postpones the due date	Presentation date, acceptance date, draft
60 days after B/L date	B/L date	60 days after B/L date	Credit period is advancing at the time of bank presentation	B/L, draft
60 days after invoice date	Invoice date	60 days after invoice date	Confirm relationship to shipment date	Invoice, draft
90 days after acceptance	Acceptance date of the draft	90 days after acceptance date	Record acceptance date accurately	Accepted draft, bank notification
Fixed date	Specified calendar date	The stated calendar date	Confirm holidays, bank holidays, and local legal practice	Draft, response from local bank

In D/A, the longer the payment period, the longer the credit period granted by the exporter. Furthermore, under “after sight” conditions, delayed presentation may push the due date backward, while under “after B/L date” conditions, the due date may already be near upon cargo arrival.

Rather than simply stating “payment in 60 days,” it is necessary to align the start date of the 60 days across the sales contract, draft, invoice, and Collection Instruction.

Practical Workflow of D/P and D/A Collections

1. The exporter and importer agree on D/P or D/A in the sales contract.
2. Confirm payment currency, existence of a draft, credit period, start date, and required documents.
3. Check importer’s creditworthiness, transaction history, country risk, and remittance restrictions.
4. Confirm the need for trade insurance applicable to the collection transaction.
5. If considering Export Bill Insurance, confirm that the exporter’s bank purchases the draft rather than simply requesting collection.
6. Select transport documents suitable to the payment terms from Original B/L, Sea Waybill, or Surrendered B/L.
7. The exporter ships the cargo and prepares the B/L, invoice, packing list, draft, etc.
8. The exporter submits the collection request and shipping documents to the exporter’s bank.
9. The remitting bank prepares the Collection Instruction and sends the documents to the collecting bank.
10. The presenting bank notifies the importer of document arrival and requests payment or acceptance.
11. For D/P, documents are released after payment; for D/A, documents are released after acceptance of the draft.
12. The importer uses the B/L etc. to request D/O issuance, complete import customs clearance, and collect the cargo.
13. Under D/P, collection funds are transferred between banks and deposited to the exporter.
14. Under D/A, acceptance notification and due date are managed and payment presentation and collection occur on the due date.
15. In case of non-payment or non-acceptance, confirm bank notification per Article 26 and issue additional instructions for document and cargo handling.

Relationship between Original B/L and Cargo Release

When using Original B/L in D/P and D/A collections, document delivery by the bank and cargo release by the importer are linked.

Under D/P, the importer generally cannot receive the Original B/L until payment is made, so issuance of the D/O and cargo collection cannot proceed. This grants the exporter a certain degree of documentary control; however, if the importer refuses payment, the cargo remains at the port, CFS, or warehouse.

Under D/A, the importer may receive the Original B/L upon acceptance of the draft and, before the due date, proceed with D/O issuance and cargo collection. Even if the cargo is resold, processed, or consumed afterward, the exporter cannot collect the payment until the due date.

Points to Note When Using Sea Waybills or Surrendered B/L

Since Sea Waybills generally do not require presentation of the original for cargo release, even if documents are held under bank control like with Original B/L, cargo pickup may not be fully controlled.

Surrendered B/Ls operate such that the Original B/L is surrendered or collected at the loading port and presentation of the original is not required at the destination. As a result, the importer may proceed to cargo collection before receiving documents from the bank.

When emphasizing “no delivery of cargo before payment” under D/P, merely stating D/P in the sales contract is insufficient. It is essential to confirm the actual B/L format used, the Consignee field, Notify Party field, surrender instructions, and the shipping line or NVOCC cargo release conditions.

Extent of Banks’ Document Checking

In D/P and D/A collections, banks are sometimes mistakenly expected to conduct detailed examination of documents as under L/C transactions and guarantee that documents comply exactly with contract conditions.

Article 4 of URC522 states that banks act according to instructions in the Collection Instruction and are not required to search for compliance instructions within the shipping documents.

Article 12 requires banks to confirm whether the received documents correspond superficially to the listed documents in the Collection Instruction but imposes no further examination obligation, and documents are generally presented in received condition.

Article 13 clarifies that banks do not guarantee the form, sufficiency, accuracy, genuineness, absence of forgery, legal effect, quantity, quality, condition, value, or existence of the cargo.

Therefore, if inconsistencies exist among the invoice, B/L, certificate of origin, inspection certificate, etc., the importer may refuse payment or acceptance based on these discrepancies. The bank’s acceptance of documents does not mean they fully conform to the sales contract.

Relationship Between Banks and Cargo

Article 10 of URC522 indicates that sending cargo directly to a bank’s address or consigned to the bank or under the bank’s instructions requires prior consent from the bank.

Banks are not obliged to receive, store, insure, prevent deterioration, sell, or return cargo related to the collection. Even with specific instructions, banks may only respond within the scope of their individual agreement.

If the importer refuses payment or acceptance, exporters should not delay action assuming the bank will safeguard the cargo. Exporters need to contact freight forwarders, shipping lines, NVOCCs, CFS, warehouses, customs brokers, local agents, and insurance companies directly to confirm cargo location and incurred costs.

Comparison of Collection Methods and Other Payment Methods

Payment Method	Relationship Between Documents and Payment	Bank Payment Guarantee	Main Exporter Risks	Suitable Situations
Advance Payment	Payment received before shipment	Not required	Exporter faces little collection risk	New transactions, high-risk countries, custom orders
D/P Collection	Documents handed over against payment	None	Payment refusal, cargo detention, disposal costs	Ongoing transactions with some credit relationship
D/A Collection	Documents handed over against acceptance of draft	None	Non-payment at maturity, insolvency, inability to remit	Sales on credit to creditworthy repeat customers
Purchase of Drafts	Exporter’s bank purchases the drafts and documents and requests collection from the overseas bank	Does not guarantee importer’s payment	Repurchase demands from bank, breach of purchase conditions	Transactions requiring early post-shipment cash flow
L/C	Payment demanded upon presentation of documents complying with UCP terms	Payment guarantee by issuing bank	Discrepant documents, bank or country risks	Large transactions, new business, transactions requiring credit enhancement
Open Account	Goods and documents delivered first; payment remitted later	None	Highly dependent on importer credit	Group companies, long-term stable transactions

D/P collection may reduce bank fees and procedural burden compared to L/C but has no bank payment guarantee. D/A collection bears credit risk close to open account but is structured by acceptance of drafts and bank-mediated presentation records.

Bank Notifications of Payment or Acceptance Refusal

Article 26 of URC522 provides procedures for the collecting bank and presenting bank to notify regarding payment, acceptance, non-payment, or non-acceptance.

The presenting bank must endeavor to confirm the reasons for non-payment or non-acceptance and notify without delay. The remitting bank then issues appropriate instructions on subsequent handling of the documents.

Article 26 also allows the presenting bank to return documents if no further instructions are received within 60 days after notification of non-payment or non-acceptance.

This 60-day period does not mean the exporter may wait 60 days before acting on cargo handling decisions. Since port charges and cargo deterioration accrue daily, in practice, responses regarding both documents and cargo should begin immediately after receipt of the refusal notification.

Initial Actions After Payment or Acceptance Refusal

Timing	Actions	Confirm With	Documents to Confirm	Risks of Delayed Decision
Immediately upon receipt of refusal notice	Confirm content and reason for non-payment or non-acceptance	Exporter’s bank	Bank notification, Collection Instruction	Misunderstanding refusal reason delays response
Same day	Confirm location of Original B/L and other documents	Bank, importer	Document delivery records, bank replies	Unable to determine who holds cargo release rights
Same day	Confirm cargo location, unloading, customs clearance, D/O issuance, and gate-out status	Freight forwarder, shipping line, NVOCC, local agent	B/L, Arrival Notice, cargo tracking info	Cargo may be taken without authorization
Same day	Check demurrage, CFS/warehouse storage fees, and detention conditions	Shipping line, NVOCC, CFS, warehouse	Tariff sheets, free time responses, estimated invoices	Costs may exceed cargo value
By next business day	Confirm importer’s payment intention, refusal reason, and requests for terms adjustment	Importer, banks	Sales contract, emails, claim documents	Lose opportunity for renegotiation
Early	Confirm whether accident notification to trade insurance covering collection transactions is required	NEXI, insurance company, insurance agent	Insurance policy, clauses, refusal notification	Impacts notification deadlines and loss mitigation duties
Early	Reconfirm whether handling involves collection or purchase	Exporter’s bank	Collection request, purchase calculation, bank agreements	May act assuming Export Bill Insurance applies when it does not
Early	Compare options for return, resale, third-country resale, storage, or disposal	Internal responsible persons, local agent, customs broker	Cost estimates, residual value, local regulations	Reduction of feasible options
After policy decision	Issue additional instructions to the bank regarding document handling	Exporter’s bank	Formal instruction, internal approvals	Documents may be returned or held up at the bank
After policy decision	Arrange official storage, resale, return, or disposal of cargo	Freight forwarder, local agent, attorney	Power of attorney, quotations, customs permits	Unauthorized disposal or additional liabilities may arise

Options for Cargo Handling After Payment Refusal

Option	Main Content	Advantages	Disadvantages / Constraints	Items to Confirm
Renegotiation with Importer	Negotiate discounts, installment payments, payment extensions, additional collateral, etc.	Possibility of smaller loss than return or resale	Easy concessions may lead to future non-payment	Prior approval from insurer, contract amendments, terms of bill of exchange
Local Resale	Sell to another buyer within the same country	May avoid return shipping costs	Requires price reduction, change of importer, sales permission	Ownership, Import Permit, customs name, product regulations
Third Country Sale	Re-export cargo and sell to a buyer in a different country	May secure better sale price	Re-export procedures, additional freight, re-obtaining certificates	Certificate of origin, export control, sanctions, repacking
Return to Exporting Country	Re-ship cargo and bring back under own control	Avoid dumping sales locally	Return freight, re-import, customs duties, quality deterioration	Return approval, insurance coverage, re-import tax procedures
Local Storage	Store while waiting for alternative buyer or payment	Secures negotiation time without immediate loss realization	Storage fees, deterioration, theft, legal lien rights	Storage contract, insurance, storage period, cost limits
Local Disposal or Destruction	Dispose of cargo difficult to recover value from	Stops increase of storage costs	Disposal fees, environmental regulations, required certificates	Customs permission, disposal certificates, insurer approval
Legal Recovery	Claim bills of exchange, purchase price, or take preservation measures	Potential for debt recovery and asset protection	Costs, time, existence of opponent’s assets	Governing law, court jurisdiction, arbitration clauses, statute of limitations

When Specifying a Case of Need

The Case of Need is a representative who handles matters locally on behalf of the exporter in case of non-payment or non-acceptance.

According to Article 25 of URC522, when the Principal designates a Case of Need, the Collection Instruction must clearly and fully specify that person’s authority. Merely listing the name and contact details may result in the bank refusing to accept instructions from that person.

Authority Item	Content if Allowed	Handling if Not Allowed	Notes
Negotiation with Importer	Discuss payment date, installments, collateral, etc.	Limited to information gathering only	Separate from discount authority
Discounts	Approval within a specified limit amount or rate	Requires individual exporter approval	May require insurer’s approval
Cargo Storage	Arrange transfer and storage at designated warehouse	Limited to obtaining quotations only	Confirm ownership and cost responsibility
Local Resale	Search for alternative buyers under certain conditions	Limited to introducing candidates only	Clearly define authority to conclude sales contracts
Return Shipment	Arrange return shipment after exporter approval	Limited to obtaining freight quotations only	Requires customs, B/L, insurance arrangements
Protest	Engage local lawyer or notary public	Requires formal bank instructions	Confirm consistency with Article 24

Granting excessive authority to the Case of Need may result in unintended discounts, cargo disposal, or cost burdens for the exporter. Conversely, too limited authority may delay urgent responses due to time differences or internal approvals.

Situations to Consider Protest

Protest is a procedure creating formal rejection documents under local law for non-payment or non-acceptance of a foreign exchange bill.

Article 24 of URC522 requires specific instructions in the Collection Instruction if a Protest or alternative legal procedure is to be requested from the bank. Without such specific instructions, the bank is not obligated to perform a Protest.

However, the necessity, method, deadline, and legal effect of Protest vary by the foreign exchange law or relevant laws of the transaction country. It is necessary to consult local lawyers or the bank in advance rather than mechanically requesting Protest for all non-payments.

Responding to Importer Claims of Document Deficiencies

Importers may refuse payment citing deficiencies in documents such as Invoice, Packing List, B/L, insurance policy, certificate of origin, or inspection certificate.

Under D/P or D/A collections, unlike L/Cs, banks do not strictly verify document compliance with credit terms to guarantee payment. When the importer asserts document deficiencies, it is judged within the sales contract relationship between exporter and importer whether the claim is valid or merely an excuse for non-payment.

The exporter cross-checks the following documents:

• Sales contract and Purchase Order
• Proforma Invoice and Commercial Invoice
• Collection Instruction
• Bill of exchange
• B/L, Sea Waybill, or other transport documents
• Packing List
• Certificate of Origin
• Inspection certificate and quality certificate
• Import Permit, product registration, and regulatory materials
• Emails and records of specification changes before and after shipment

The bank’s receipt of documents or the completeness of the document set alone does not prove the absence of document deficiencies under the sales contract.

Import Country’s Remittance Restrictions and Foreign Currency

Even if the importer intends to pay and holds local currency funds, remittance may be impossible due to foreign exchange restrictions, foreign currency remittance controls, central bank approval, financial sanctions, suspension by correspondent banks, etc.

Articles 17 and 18 of URC522 define the relationship between payment in local or foreign currency and document delivery. It is important that the specified currency can be used and remitted according to the Collection Instruction.

Before the transaction, exporters should confirm the following:

• Whether the contract currency can be obtained locally
• Whether central bank or authority remittance approvals are required
• Whether Import Permit and foreign currency allocation are linked
• Whether the paying bank can remit in the specified currency
• Whether intermediary banks conduct sanctions or compliance checks
• Trade insurance coverage scope if remittance failure occurs

Trade Insurance and Marine Cargo Insurance in Collection Transactions

Comparison Item	General Trade Insurance / SME Export Payment Insurance	Export Bill Insurance	Marine Cargo Insurance	Practical Items to Confirm
Main Risk Covered	Export failure, non-payment, credit risk, force majeure, etc.	Loss to bank from non-payment of bill of exchange purchased by bank	Loss or damage to cargo during transit	Distinguish non-payment, bank purchase, physical damage
Main Insured Party	Exporter or others according to insurance product and contract type	Bank that purchased the bill of exchange	Exporter, importer, or others with insurable interest	Confirm who is policyholder and insured
D/P Collection Requests	May be covered depending on contract and acceptance terms	Bills presented as collection requests to the bank are excluded	Simple non-payment differs from cargo damage	Confirm collection or purchase treatment by bank documents
D/A Collection Requests	Non-payment at maturity may be covered depending on contract and acceptance terms	Bills presented as collection requests to the bank are excluded	Physical damage normally not covered if cargo delivered properly	Report usance and importer credit in advance
D/P or D/A with Bank Purchase	Check relation with other insurance contracts	Subject if bank purchase, purchase term, and notification conditions are met	Physical damage judged separately	Do not decide coverage solely by D/P or D/A terms
Insurance Applicant	Exporter or others apply according to insurance product	Not applied by exporter directly; based on bank-NEXI contract and purchase notification	Arranged per sales terms and Incoterms	Confirm application deadlines, notification deadlines, insurance periods
Cargo Wetting or Damage	Cannot judge solely by link to non-payment	Non-payment insurance for bills; does not cover cargo damage itself	Judged by covered risks, exclusions, insurance period	Conduct survey and accident notification
Damage During Return Shipping	Separate issue from non-payment risk	Separate issue from unpaid purchased bills	Confirm if return leg is covered by insurance	Contact insurer and insurance agent before return shipping starts
Damage During Local Storage	Check damage prevention duties and recovery actions	Confirm bank purchase and exporter recovery obligations individually	May need additional arrangements if after usual insurance period	Declare storage location, period, and risk condition

The non-payment risk in D/P and D/A collection requests and the risk of cargo loss or damage are separate risks.

As preparation against non-payment in collection transactions, general trade insurance, SME and agricultural export payment insurances, and other trade insurances with NEXI may apply depending on trade details and company scale. However, the applicable contracts, payment terms, importer rating, country acceptance policy, application deadlines, coverage rates, deductibles, and loss prevention obligations should be confirmed for each product.

Export Bill Insurance Does Not Apply to Collection Requests for Bills of Exchange

Export Bill Insurance does not exclude D/P or D/A payment conditions in general. If the exporter-side bank purchases the bills of exchange under D/P or D/A conditions and satisfies NEXI’s requirements, coverage may apply.

However, bills of exchange simply presented to the bank as collection requests by the exporter are not covered by Export Bill Insurance. The "collection" described in this article, where the bank acts on behalf of the exporter to collect payment from the importer and remits to the exporter after payment, is excluded from coverage.

Under Export Bill Insurance, the bank that purchased the bills is the insured party, and bank purchase and prescribed notifications to NEXI form the basis of the insurance relationship. Exporters do not directly apply for Export Bill Insurance with NEXI.

Therefore, insurance considerations for D/P and D/A transactions proceed in the following order:

1. Confirm whether bills presented to the exporter-side bank are collection requests or bill purchase requests.
2. If collection requests, exclude Export Bill Insurance as a candidate.
3. Check applicability of general trade insurance or other applicable trade insurances for collection transactions.
4. If bank purchase, confirm whether the bank has concluded an Export Bill Insurance contract.
5. Confirm with the bank the purchase deadlines, bill payer ratings, country acceptance policy, bill usance, and other conditions.
6. Confirm buyback claims and conditions with the bank’s contract in case of non-payment after purchase.

Simply stating “Export Bill Insurance can be used for D/P and D/A transactions” is inadequate. The correct understanding is “Export Bill Insurance may apply when a bank purchases bills of exchange under D/P or D/A conditions, but bills presented as collection requests are not covered.”

Furthermore, if the cargo is returned after payment refusal, moved to another warehouse, or forwarded to a third country, the original marine cargo insurance may not automatically continue to cover the subsequent storage or return shipment period. The insurer or insurance agent should be notified before moving cargo, and insurance period and additional conditions confirmed.

Freight Forwarder’s Scope of Involvement

The five classifications used in this article are not established by law or industry-wide consensus. They serve as an analytical framework within this series to clarify the scope of freight forwarder involvement.

Standard Five Classifications	Possible Tasks Performed in D/P or D/A Transactions	Tasks Not Usually Undertaken	Reference Materials for Confirming Responsibility Scope	Practical Notes
Simple Intermediary	Shipping line booking, document delivery, arrival information notification	Collection guarantee, importer credit assessment, instructions to bank for collection	Quotation, emails, delegation details	Do not confuse document delivery with responsibility for payment management
Cargo Transportation Service Provider	Transportation based on cargo transportation contract, cargo tracking, return arrangements	Payment guarantee for sale price, acceptance guarantee of bills of exchange	Cargo transportation terms and conditions, transportation contract, issued documents	Separate transportation liability from payment risk
NVOCC / House B/L Issuer	Issuance of House B/L, issuance of D/O, management of cargo delivery conditions	Preparation of bank Collection Instruction, importer payment guarantee	House B/L, NVOCC terms, D/O procedures	Confirm that the B/L delivery conditions do not conflict with D/P or D/A terms
Door-to-Door Single Contractor	Integrated transport from pickup to import delivery, coordination of returns and rerouting	Guarantee of payment obligations under sales contract	Door-to-Door contract, quotation terms, transportation terms	Even if taking overall transportation responsibility, this is not the collecting bank
Agent/Coordinator for Specific Operations	Local storage, finding resale candidates, return quotations, inspection coordination	Unauthorized discounting, cargo disposal, legal collection	Power of attorney, work instructions, emails	Distinguish between Case of Need authority and freight forwarder's scope of delegation

Contracting Carrier and Actual Carrier are legal or contractual status concepts and do not replace the Standard Five Classifications used in this article.

Practical operations such as document collection, B/L replacement, storage, inspection, return, repacking, customs clearance, and D/O issuance do not by themselves constitute a sixth classification.

Even if a freight forwarder issues a B/L, collects documents for the bank, and notifies cargo arrival information, this does not guarantee payment by the importer. Specific responsibilities should be determined by the quotation, transportation contract, B/L, terms and conditions, emails, delegation content, and actual handling.

Cases Commonly Problematic in Practice

Case	Main Cause	Reference Materials	Key Judgment Points	Initial Response
Cargo arrives before documents	Short shipping time, delay in interbank document transmission, delay in document preparation	B/L, courier records, Arrival Notice	Can extra costs be minimized by withholding documents before payment?	Confirm document location, free time, and planned payment date
D/P payment was refused	Insufficient funds, market price decline, loss of buyer, quality complaints	Bank notification, sales contract, complaint materials	Which minimizes loss better: renegotiation or cargo disposal?	Confirm cargo current location and incurred costs on the same day
D/A non-payment at maturity	Importer bankruptcy, cash flow deterioration, remittance restrictions	Accepted bill, bank notification, credit information	Bill claim, sales price claim, applicable trade insurance relations	Notify bank, insurer, and local legal counsel
Mistaken belief that Export Bill Insurance applies to collections	Confusion between settlement terms of D/P and D/A and bank’s collection/purchase classification	Collection request, purchase calculation, bank agreement	Is there purchase of draft by the exporter’s bank?	If collection, it is excluded; check other trade insurance instead
Rejected due to document deficiencies	Mismatch of B/L, invoice, certificate of origin, etc.	Sales contract, complete shipping documents, Collection Instruction	Is the deficiency contractually serious or a pretext for refusal?	Confirm discrepancies and possibility of correction
Ambiguous instructions on D/P or D/A	Insufficient details in Collection Instruction	Collection request, Collection Instruction	Under Article 7, conditions when documents are handed over	Issue correction instructions to bank before document delivery
Importer refused to pay fees	Unagreed charge conditions, missing "Do not waive" instruction	Collection Instruction, sales contract	Whether to waive charges and release documents	Confirm Article 21 and internal policy
Misunderstanding that bank will store the cargo	Insufficient understanding of Article 10, no local agent designated	Collection Instruction, bank response	Can cargo protection be expected without bank’s consent?	Arrange directly with warehouse, forwarder, insurance company
Payment cannot be made due to remittance restrictions	Foreign currency shortage, central bank regulations, sanctions screening	Bank response, regulatory documents, remittance application	Is this credit risk or acute crisis? Can payment currency be changed?	Consult trade insurer and bank early
Importer took cargo before payment	Sea Waybill, Surrendered B/L, or D/O issuance condition conflicts	B/L, surrender instruction, D/O records	Did D/P document management actually control cargo release?	Keep transportation documents and cargo release records
No instructions issued after refusal notice	Internal approval delay, absence of responsible person, no Case of Need designation	Article 26 notice, internal records	How to stop document return and increased cargo holding costs?	Take provisional storage and official additional instructions immediately

Example 1: Cargo Arrives Before Documents in D/P at Sight

A Japanese exporter shipped goods on a short-haul route with payment terms of D/P at sight. Original B/L, invoice, and packing list were sent via bank, but due to short shipping time, documents had not yet arrived at the Presenting Bank when cargo reached the import port.

The importer expressed willingness to pay, but the bank had not received the documents, so formal presentation and payment could not proceed. As a result, the cargo was held at the terminal or CFS, and charges were expected after free time expired.

In this case, it is not always appropriate to cancel the D/P terms and switch to Sea Waybill or surrender procedures. Removing document control via the bank risks allowing the importer to pick up cargo before payment, losing the main control function of D/P.

The exporter should simultaneously confirm courier status of documents, estimated arrival at bank, importer payment readiness, free time, storage fees, and D/O issuance conditions, comparing ways to expedite document arrival against additional costs. For future shipments, document preparation dates, bank submission dates, transit time, and document sending methods should be scheduled before departure.

Example 2: Non-Payment at Maturity on D/A 60 Days after B/L Date

An exporter allowed a long-standing importer a D/A 60 days after B/L date. The importer accepted the bill of exchange, received the Original B/L, and took delivery of the cargo.

However, just before maturity, the importer’s cash flow worsened and payment was not made on the maturity date. The cargo had already been sold and could not be recovered and resold by the exporter.

In this case, the accepted bill held by the exporter is important evidence but is not a bank guarantee. The exporter should keep the non-payment notice under Article 26, the accepted bill, sales contract, invoice, cargo delivery records, and negotiation records with the importer.

The first check is whether this bill was presented to the bank for collection or purchased by the bank. If only collection, Export Bill Insurance is not applicable; confirm application of trade general insurance taken out before the transaction. If purchased by the bank, check the presence of Export Bill Insurance and bank repurchase claim conditions.

Then, confirm whether Protest or alternative procedures, sales price claims, bill claims, asset preservation, bankruptcy claims reporting, and applicable trade insurance notifications are needed.

Example 3: D/P Payment Refusal on Perishable/Food Cargo

When exporting short shelf-life food under D/P terms, the importer refused payment citing market price declines. The Original B/L remained with the bank, but cargo had already arrived at refrigerated facilities at the import port.

Even though the bank manages the documents, under URC522 Article 10, it is not obligated to store, temperature control, insure, maintain quality, or resell the cargo.

The exporter should not only wait for the payment refusal notice but also contact the local forwarder, cold storage warehouse, customs broker, and Case of Need, and confirm temperature logs, storage periods, warehouse charges, transfer of Import Permit, alternative buyer options, and disposal deadlines.

If cargo value is declining daily, prolonged discount negotiations with the importer may result in greater loss compared to accepting a certain loss through local resale or disposal. However, if trade insurance or marine cargo insurance is in place, insurer approval should be confirmed before discounting, resale, return, or disposal.

Example 4: D/P Could Not Control Cargo Delivery Due to Surrendered B/L

The sales contract stated D/P at sight, but the exporter’s logistics staff arranged a Surrendered B/L as usual.

The importer received D/O from the shipping line or NVOCC before paying the bank and took delivery of the cargo. The importer then refused payment to the bank citing quality complaints.

In this case, although D/P payment terms existed, the Original B/L necessary to control cargo delivery was not held by the bank, so the cargo control via document delivery conditions failed.

To identify the cause, compare the sales contract, B/L instructions, surrender request, House B/L, Master B/L, D/O issuance records, and instructions given to the forwarder. Going forward, unify the confirmation flow between sales and accounting departments that set payment terms and logistics departments that decide B/L format.

Common Misunderstandings

Misunderstanding	Actual Understanding	Practical Notes
D/P guarantees payment	The bank will not release documents unless paid by the importer, but the bank does not guarantee payment	Anticipate costs of cargo disposal after refusal
D/A acceptance equals payment	Acceptance is a promise to pay on maturity, not immediate payment	Manage credit risk of non-payment and bankruptcy
D/P or D/A enables use of Export Bill Insurance	D/P or D/A require bank purchase of draft; collection-only bills are not covered	Check and distinguish collection requests and purchase calculations
Export Bill Insurance is applied for directly by the exporter	The bank that purchases the draft is the insured party, with procedures between the bank and NEXI	Confirm bank’s insurance contract and purchase notification
Banks will perform detailed examination of shipping documents	Bank review under URC522 differs from L/C document examination	Exporter should verify documents against sales contract
URC522 automatically applies to all collections	It must be incorporated into the Collection Instruction	Check for Article 1 governing reference in instructions
The collecting bank and presenting bank are always the same	They have different defined roles under Article 3	Confirm actual presenting bank and notification route
Banks will store cargo refused by the importer	Under Article 10, banks have no inherent obligation to store or insure cargo	Arrange local agents, warehouses, forwarders separately
Writing "Do not waive charges" guarantees importer pays fees	If importer refuses, the bank may withhold documents and collections may stall	Decide on fee amount and priority of continuing the transaction
Collection Order matching sales contract is sufficient	Banks act based on Collection Instruction between banks	Confirm exporter’s instructions are reflected in interbank instructions
D/P effect is the same without Original B/L	Sea Waybill or Surrendered B/L may fail to prevent cargo pickup before payment	Decide payment terms and transport document format together
Article 26’s 60-day period allows waiting on cargo handling	60 days regulate additional document instructions; cargo fees accrue daily	Check cargo status immediately after refusal notice
Marine cargo insurance also covers payment default	Cargo physical damage and sales payment default are different risks	Consider trade insurance and marine cargo insurance separately

Decision Checklist

Verification Stage	Party to Verify With	Items to Verify	Actions if Issues Arise
Before Concluding Sales Contract	Importer, Internal Credit Department	D/P or D/A, credit period, payment currency, importer creditworthiness	Consider switching to L/C, advance payment, guarantee, or credit limit adjustment
Before Insurance Arrangement	NEXI, Insurance Company, Insurance Agent	Coverage scope for non-payment and cargo damage	Arrange necessary insurance before starting the transaction
When Considering Export Bill Insurance	Exporter’s Bank	Collection request or purchase of the draft	If collection request, exclude Export Bill Insurance from candidates
Before Shipment	Exporter’s Bank	URC522 applicability, bank acceptance, required documents	Revise bank’s prescribed form and instruction content
When Preparing B/L Instructions	Freight Forwarder, NVOCC, Shipping Line	Type of B/L: Original B/L, Sea Waybill, or Surrendered B/L	Change B/L format to suit D/P management purposes
When Requesting Collection	Exporter’s Bank	D/P or D/A, amount, currency, deadline, fees, interest	Correct vague conditions before sending documents
When Sending Documents	Bank, Courier	Document checklist, number of originals, tracking number, expected arrival date	Supplement missing documents and inform importer of estimated arrival
Before Cargo Arrival	Freight Forwarder, Shipping Line, NVOCC	ETA, Free Time, D/O issuance conditions, expected document arrival	Reduce discrepancy between document and cargo arrival
At D/A Acceptance	Bank, Importer	Signature format, acceptance date, maturity date, acceptance notice	Confirm incomplete acceptance with the bank
When Payment Is Refused	Bank, Importer	Reason for refusal, document location, payment possibility	Begin renegotiation and cargo handling in parallel
When Cargo Is Detained	Freight Forwarder, Warehouse, Customs Broker	Cargo current location, costs, condition, handling deadline	Decide on storage, resale, return, or disposal
When Considering Protest	Bank, Local Attorney	Necessity under local law, deadlines, procedure, costs	Issue specific instructions in Collection Instruction
When Insurance Incidents Occur	Insurer, Insurance Agent	Applicable insurance, notification deadlines, duty to mitigate damage, contract amendment approval	Obtain approval before discounting, returning, or disposing
When Pursuing Legal Recovery	Local Attorney, Maritime Lawyer	Draft claims, sales price claims, cargo disposal rights, statute of limitations	Prioritize evidence preservation and asset protection

Situations Requiring Consultation with Local or Maritime Lawyers

In the following cases, handling should not be limited to banks or freight forwarders; consultation with a commercial lawyer familiar with the transaction country, a lawyer experienced in bill law, or a maritime lawyer is necessary.

• When Protest or enforcement is required for non-payment of accepted drafts
• When the importer files for bankruptcy, civil rehabilitation, or liquidation
• When ownership or disposal rights of cargo are disputed
• When warehouses, port operators, or shipping lines assert liens on cargo
• When the importer takes cargo before payment
• When customs approval is required for local resale, third-country sale, return, or disposal
• When sanctions, foreign exchange controls, or export control regulations apply
• When Collection Instruction contradicts the sales contract
• When responsibilities among bank, freight forwarder, NVOCC, or importer are disputed
• When statute of limitations, filing deadlines, arbitration application deadlines, or rights preservation deadlines for bills are approaching

Internal Management Before Adopting D/P or D/A Transactions

Deciding on D/P or D/A terms solely by sales staff may cause disconnection between payment terms and logistics documentation.

At minimum, the following departments or personnel need to share information:

• Sales: sales terms, negotiations with importer, pricing, payment terms
• Accounting and Finance: collection or purchase classification, bank procedures, payment management, exchange rates, maturity management
• Credit Control: credit limits, importer rating, delinquency history
• Logistics: B/L format, vessel schedules, document dispatch, cargo arrival, Free Time
• Legal: governing law, dispute resolution, bills, guarantees, recovery methods
• Insurance: trade-related insurances, Export Bill Insurance applicability, marine cargo insurance, notification deadlines
• Local Agents: cargo storage after refusal, resale, return, disposal

When deciding on D/P or D/A as payment terms, it is crucial to simultaneously confirm whether submission to the bank will be for collection or purchase, B/L format, document dispatch methods, responsible parties after refusal, and insurance arrangement.

Summary

• D/P is a collection method where commercial documents are released against payment; D/A releases documents against acceptance of drafts.
• Under D/P and D/A, the bank performs collection procedures but does not guarantee the importer’s payment.
• URC522 refers to the 1995 revised ICC Publication No. 522, applicable when embedded in Collection Instruction.
• Collection, financial and commercial document distinctions are organized in Article 2; related parties in Article 3; and Collection Instruction in Article 4.
• D/P and D/A document delivery conditions are stipulated in Article 7; bank and cargo, storage, and insurance relationships in Article 10.
• Bank’s document verification limits must be understood separately in Article 4, Article 12, and Article 13.
• Waiver of fees is covered in Article 21; Protest in Article 24; Case of Need in Article 25; and refusal notice in Article 26.
• D/A carries higher risk of non-payment at maturity than D/P because the importer may take cargo before payment.
• Even under D/P, refusal to pay results in cargo detention, demurrage, CFS or warehouse storage fees, and return costs.
• Payment terms D/P and D/A are distinct issues from the collection or purchase distinction by the exporter’s bank.
• Export Bill Insurance applies to drafts purchased by banks; drafts presented for collection cannot be insured under Export Bill Insurance.
• Drafts under D/P or D/A may qualify for Export Bill Insurance if purchased by banks and meeting NEXI’s requirements.
• The non-payment risk in collection transactions discussed here is separately checked for applicability of trade general insurance, SME/agriculture/forestry/fishery export credit insurance, etc.
• The choice among Original B/L, Sea Waybill, and Surrendered B/L affects the scope of cargo release control in D/P.
• After payment or acceptance refusal, do not wait for bank notification only; immediately confirm document location, cargo whereabouts, costs, and applicable insurance.
• The 60-day period referred to in Article 26 is not a grace period for cargo handling.
• Trade insurance risk from non-payment and marine cargo insurance risk from physical damage should be arranged separately.
• Before discounting, returning, local resale, third-country sale, or disposal, confirm insurer, bank, local law, and cargo disposal rights.
• D/P and D/A achieve safety only when designed as an integrated system including payment terms, collection/purchase classification, credit control, B/L management, transit time, local regulations, cargo handling, and insurance.

If adopting D/P or D/A transactions, clearly specify whether the bank handling is a collection request or draft purchase, confirm importer creditworthiness, Collection Instruction, B/L format, cargo arrival timing, cargo handling after refusal, and applicable trade insurance before transaction commencement.

In case of payment refusal, acceptance refusal, return, local storage, or third-country transfer, these may affect the marine cargo insurance policy period or additional arrangements. Consult the insurance company or insurance agent before moving or disposing of cargo.

This article provides a general overview of trade practice and URC522. It does not constitute legal advice, bank confirmation, insurance underwriting, claims settlement, or recovery outcomes for individual transactions. Actual handling should be confirmed case-by-case with reference to the sales contract, Collection Instruction, bank rules, purchase agreements, URC522, local laws, bill law, foreign exchange regulations, sanctions, and each insurance policy.