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Question 5: If payment is planned to be by made by D/P at 60 days after shipment How can the seller and the buyer apply for trade financing?
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Answer #1

D/P means documents against payment

It is sight bill or demand bill. The collecting bank will give documents of title of goods to buyer only after he pays the entire amount.

Here the seller can apply for finance from his bank which is the remitting bank by showing the contract between buyer and seller. Mostly the seller will apply for working capital loan.

Same way the buyer can also loan from his bank by showing the contract.

In case DP bill the buyer and seller enter an agreement.

The seller ships the good and sends the documents to his bank ( Remitting bank) . The remitting bank than sends the documents to collecting bank by instructions of how the amount and how much should be paid with time. After buyer paying the bill documents are given to him. If the buyer is not paying in time. The seller has right to cancel the agreement.

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