The Vietnam Trade Office under the Embassy of Vietnam in Spain has just recommended Vietnamese exporters to carefully study Spanish partners first before signing contracts with them to avoid being cheated.
The office has previously received many letters from Vietnamese firms seeking support in recovering debts from Spanish firms.
There have been many cases where Spanish businesses cannot afford payments but still signed contracts, the office warned.
They usually paid even earlier than required for the first batch to create confidence, and then demanded D/A payment for a larger shipment later on.
But they then vanished after receiving shipping documents and goods from Vietnamese exporters.
D/A, standing for Documents against Acceptance, is a form of payment agreement between an exporter and importer.
Upon delivery or shipment of items the exporter prepares shipping documents like bill of lading, commercial invoice, packing list, bill of exchange or bank draft. These documents are sent to the bank of the importer. Upon arrival of goods to the country of the importer, the importer will get the shipping documents.
When the importer accepts the shipment and signs the bill of exchange or bank draft, then the exporter can collect the payment and the importer pays the bank.