Cash Against Documents Funding

Cash Against Documents funding or Documents Against Payment (D/P) is a robust form of cash on delivery (COD). Every day merchandise is exported from China and other foreign countries to the US and the US importer must pay the invoice in full or arrange Cash Against Documents Financing before they are able to take possession of the goods-either FOB China or the US. The process is fairly straightforward and the exporter will fill the order and ship it if they have been prepaid or they know they will get paid if they live up to the terms of the purchase order.

What is FOB or Free On Board? An exporter from China offers to sell you t-shirts. The exporter may offer the purchaser (importer) $5 a shirt if they buy FOB China -meaning that the seller (exporter) has the funds transferred before they are shipped and pays for the merchandise and shipping costs sight unseen but can be inspected for quality and quantity. In another scenario, the exporter offers the purchaser the ability to buy the t-shirts FOB Miami (meaning the purchaser may physically inspect the goods before transferring the money and the seller has paid the shipping, import duties and other costs) for $12 a shirt.  Experienced logistic consultants can help you weigh the risks such as the credibility of the exporter, quality of merchandise or speed of delivery.  Paragon has deep experience versus other banks and financing companies who may not have the same history with this type of transaction.

Once the type of transaction has been decided, the exporter prepares paperwork including a Bill of Exchange, manifest, inspection certificates, proof of tariff payment and other required documents. Next, these documents are sent to the exporter’s bank or finance company. At that time, the exporter’s bank will send the documents to the purchaser’s finance company for review.

During this process, the exporter retains ownership of all goods being exported. The process will only be completed when the payment is made in full. One the payment has been made and verified by the bank, the appropriate documents are released to the purchaser. Fees are commonly associated with these types of transactions and are paid by either the exporter, importer or sometimes split between both.

Paragon Financial provides Cash Against Docs Financing for your business. Not only can we help with financing, but Paragon Financial has a wealth of import/trade knowledge that we bring to the table. There is a greater chance that a mistake will occur when using a bank without trade finance experience instead of a funding company that deals with these transactions on a daily basis.

To discuss your specific Import Financing needs, please contact our National Sales Manager, Chris Curtin via email or call him at 888-400-5931 ext 1.

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