Changing Payment Terms From D/P At Sight To D/A

Chemical

April, 2020

MNS received a case for recovery with payment terms as “DP at sight” against two shipments.

Discussed the matter with the debtor, who verbally informed us that due to delay in shipment from the exporter and unfortunate event of Complete Lock-down, they were not in a position to get the goods released from the port.

Further, the debtor informed us that he had requested the exporter to convert the payment term from DP to D/A 120 days from the date of Bills of Lading but did not receive any reply from the exporter. Since there was no favourable response from the exporter, they instructed their bank to return the documents back to the exporter which were returned by the Bank. Debtor further alleged that documents of the second shipment were not received by his bank till then but same instructions were given.

We updated the same to the exporter who asked us to resolve this and to get a payment plan from the debtor.

When we approached the debtor, he  informed to us that the first LOT was arrived at port in the beginning of April, 2020 and second LOT arrived at port on mid of April, 2020 and both the consignments are at port and incurring demurrage/detention charges and this will come to some 32,000 USD and showed willingness to take the materials if the exporter is willing to give him a discount of the above demurrage and detention charges and change the payment terms to DA 120 Days.

We  persuaded  the debtor to get into an MoU wherein we made them agree to clear the documents once the PH agrees for a discount as claimed above and subsequently make the payment of by the due date, which the PH and debtor agreed.

Subsequently, a formal MoU was executed to the above terms and obtained a formal Deed of Undertaking also from the debtor promising to clear the dues without any further claims within the due date along with a Guarantee letter from the promoter of the company confirming the release of funds based on Acceptance of the documents by the debtor. 

Based on the above formalities, exporter sent the documents again to the debtor’s Banker, with the modifications as required and the debtor  subsequently got released the materials and has given a confirmation of Acceptance of the documents to the Bank along-with Undertaking whereby promoters/ partners will be personally liable in case of delay in payment.

Thus , the need to find a new buyer or re-export the goods, which would have been a loss-making proposition for the exporter was obviated.

The debtor took the possession of the goods, and  MoU along with a Deed of Undertaking was signed, ensuring personal liability for delayed payments. The exporter sent modified documents, enabling the debtor to complete the release process, We kept close follow up with the buyer and ensured the payment release as per the MoU.
If you operate in the chemical sector and wish to uncover the invaluable contributions that MNS Credit Management Group can offer to enhance your collections endeavors, do not hesitate to reach out to our team. With extensive expertise in debt recovery within Bangladesh, we are equipped to assist you effectively.
Contact us at 09560700251 or simply request a callback, and let us demonstrate how we can optimize your collections process.