How to work DP at sight payment?

 How to work DP at sight payment?

"DP at sight" refers to a "Documents Against Payment" payment term, where the buyer pays for the goods only after receiving and inspecting the required shipping documents. This payment method offers less security to the seller compared to a "Documents Against Acceptance" (DAA) payment, where payment is made after the buyer accepts the documents and the shipment.

Here's how DP at sight payment works:

1. The seller ships the goods and provides the required shipping documents, such as the bill of lading and the commercial invoice, to the buyer.
2. The buyer inspects the documents and verifies that they match the terms of the purchase order.
3. If the documents are in order, the buyer pays the agreed amount to the seller or their bank.
4. The seller's bank releases the shipping documents to the buyer, allowing them to take possession of the goods.
5. The buyer can then arrange for the goods to be cleared through customs and transported to their final destination.

It's important to note that the buyer bears the risk of non-payment in a DP at sight arrangement, as the seller is not paid until the shipping documents have been received and approved. To mitigate this risk, buyers may choose to work with a reliable and trustworthy seller, or to secure the transaction with a letter of credit.