A delivery bill of lading allows importers to legally own shipped items, but exporters relinquish ownership rights upon payment. It is accompanied by a documentary collection and should not be surrendered until payment is received. This type of bill of lading can be problematic for exporters, as importers can take items without paying. It is typically used for large and reliable relationships.
A delivery bill of lading is a document issued by exporters that allows importers to legally own the items shipped by the exporter. When importers pay for a shipment, exporters relinquish their ownership rights to the items so they cannot claim title or power over them; this tends to be a cleaner method of transferring ownership than other bill of lading documents provide. These documents are usually accompanied by a documentary collection, although even if this is not used, the entity holding the bill of lading should not deliver it until the importer pays. The surrender bill of lading can be a problem for exporters, because importers who possess it can enter a port and take shipped items, even if they have not yet paid for them, and the port may charge extra for this type of bill of loading.
With some bill of lading documents, exporters still retain some ownership over the items, the price can be negotiated, or a lien can be placed on importers based on previous trades. When a consignment bill of lading is used, the exporters cannot claim any rights or powers on the items after the payment of the importers. Until the importers pay, the bill of lading should remain in the hands of the exporters so that the exporters continue to legally own the items.
The document is typically matched with a payment method for documentary collection. Exporters use their local bank to forward payment terms and documents to a bank close to the importers. When importers pay, they receive the bill of lading. Both banks act impartially, which makes the transaction safer for importers and exporters, and the transaction is more convenient because either party can simply visit a local bank.
Regardless of the payment method used, the delivery bill of lading should not be provided to importers until they pay for the goods. If an entity surrenders the invoice without receiving payment, that entity could face legal problems from the exporters. It also means that importers don’t have to pay for items if they’re not happy with the shipment or the price.
Aside from importers not paying, there are many other problems that can occur when using this type of document. Ports typically have to process the documents, so they tend to charge a fee. If the importers are malicious and avoid the dockers, they can take items from the port without paying the exporters anything. Even the payment can go on, so exporters may not collect their money until months or years into the future, if at all. This invoice is typically only used if the exporters have a large and reliable relationship with the importers.
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