Which statement about D/P and D/A is true?

• A. D/P requires payment to release documents; D/A allows the buyer to pay at a set future date.
• B. D/P allows payment on a set future date; D/A requires payment to release documents.
• C. D/P is a type of insurance; D/A is a bank loan.
• D. D/P and D/A are the same

Answer: (A)

In documentary collection terms, two common forms are D/P and D/A. D/P, or documents against payment, means the buyer must pay to receive the shipping and title documents. The bank releases the documents only after payment, so the seller gets paid before the buyer can take possession of the goods—protecting the seller’s cash flow.

D/A, or documents against acceptance, allows the buyer to take the documents by signing a time draft (an acceptance) to pay on a set future date. The documents are released upon acceptance, not instant payment, giving the buyer more time to pay and shifting some payment risk to the seller if the buyer defaults.

Thus, the statement that D/P requires payment to release documents and D/A lets the buyer pay at a future date is the correct description. The other descriptions would misstate what each term involves, and they aren’t the same mechanism.