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Payment Services

Documentary Collection

Documentary collection is a written order of the seller (exporter) for his bank to collect, on its own or through its correspondence bank, certain performance from a third person (importer) against the presentation of documents that document the delivery of certain goods. The bank then, in line with the collection conditions, issues them to the buyer, against immediate payment or against the acceptance of a bill of exchange.

A documentary collection as a payment instrument is used primarily in international trade. Unlike with a documentary letter of credit, this payment instrument does not represent any undertaking on the part of the bank – it only intermediates the collection.

Benefits

  • It is a cheaper product than a documentary letter of credit
  • It does not tie up the buyer’s money until payment
  • The seller is certain that the goods will be handed out to the buyer only once the collection conditions are satisfied
  • If a bill of exchange is used, it represents a court-enforceable obligation of the debtor

Import Documentary Collection (Client)

  • The bank processes an import documentary collection on the basis of a collection order of the sending bank
  • The bank informs the buyer in writing of the receipt of the collection and about the collection conditions and invites him to pay, accept a bill of exchange, or perform another prescribed act
  • Following payment, acceptance of a bill of exchange, or the performance of another collection instruction, it issues the collection documents to the buyer
  • The subject of the collection can be both documents pertaining to goods and a bill of exchange

Export Documentary Collection (Supplier)

  • The bank provides export documentary collections for its clients on the basis of a written order
  • The seller collects the documents required for the shipment and submits them to the bank to arrange for a collection, with instructions as to what to do with the documents
  • The bank sends documents to the presenting bank and sets the conditions under which the documents can be released to the buyer
  • The bank does not have the obligation to pay, but can help the due operation of the collection by monitoring the collection throughout its course and, if required, sends regular payment reminders
  • The bank provides the collection of foreign exchange bills of exchange subject to the same conditions