Documentary Collection for Trade Transactions

The main characteristics of documentary collection are:

The bank of the exporter forwards the prepared shipping documents to the bank of the importer along with instructions as to the terms and conditions under which the bank of the importer is entitled to deliver the documents to its client.

The exporter receives payment from the importer in exchange for the documents.

Whenever you export goods/services, ProCredit Bank shall handle the documents provided by you according to your written instructions and shall send them to the bank of the buyer – your partner in the transaction.

Whenever you import goods/services, ProCredit Bank shall receive the documents containing written instructions from the bank of the seller and shall deliver them to you when you order payment of the amount due.

The documentary collection also allows the parties to agree on deferred payment.

The documentary collection is a cheaper payment instrument than the documentary credit, but also a bit more risky. It is usually limited to transactions between parties that have already established trust.

Example:

You are a company involved in the import of goods. You have confidence in your counterparty as to the quality of the agreed goods, but you want to be sure that the goods are loaded and on their way to the agreed unloading location before you arrange their payment. In this case, you may require the Exporter to send the commercial documents, including the transport document as a documentary collection, in order to ensure that the goods are on their way and that you will have all the necessary documents to release the goods before you pay.

Whereas, if you are involved in the export of goods, then the documentary collection will provide you with the assurance that you will receive your money against delivery of the set of documents allowing the goods to be collected from the respective Importer.

Frequently Asked Questions

In cases where you do not know the counterparty and you are dealing with them for the first time, it is more relevant to use a documentary credit.

Depending on the instructions of the remitting bank – against payment and/or acceptance or other terms and conditions specified in the collection instruction of the remitting bank.

Documentary collection

Frequently Asked Questions