Beginner's Guide to Exporting. 4th Edition.

1 8 Beginner’s Guide To Exporting SOURCING FOR EXPORT FINANCING CHAPTER 5 5.1.2 Advance Payment In advance payment method the exporter is trusted to ship the goods after receiving payment from the importer. 5.1.3 Open Account In open account method the importer is trusted to pay the exporter after receipt of goods. 5.1.4 Documents Against Payment (D/P) In this case documents are released to the importer only when the payment has been done. 5.1.5 Documents Against Acceptance (D/A) The D/A transaction utilizes 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. 5.1.6 Open Account An open account transaction in international trade is a sale where the goods are shipped and delivered before payment is due, which is typically in 30, 60 or 90 days. 5.1.7 Consignments Consignment is an arrangement in which goods are left in the possession of an authorized third party to sell. Typically, the consignor receives a percentage of the revenue from the sale (sometimes a very large percentage) in the form of a commission.