Documentary Collection

Documentary collection is a process in which the seller instructs his bank to forward documents related to the export of goods to the buyer’s bank with a re-quest to present the documents to the buyer for a payment.

The seller thus remains in control of his goods until the buyer carries out a payment (or until the bill of exchange has been accepted – a written commitment to pay in the future). Documentary collection is recommended where both parties have previous cooperation experience and trust each other.

Why should you choose documentary collection?

  • A simple and cheap way to reduce business transaction risks
  • The seller is sure that ownership of goods is only transferred to the buyer when payment has been made (or when the bill of exchange has been accepted)
  • Convenient for the buyer because he does not have to pay in advance
  • Recommended when maritime transport is used, and the whole package of transport documents can be sent via banks
  • International rules are applied

How to start using it, when the documentary collection is initiated by the seller

Agree with your business partner. Agree the conditions and payment with your business partner.

Seller dispatches the goods. Seller provides documents to the bank on the goods and instructions for collection.

Seller’s bank contacts the buyer’s bank. The seller’s bank sends the documents and instructions for collection to the buyer’s bank. The latter informs their client about the received documents, and the buyer can initiate the payment.

Buyer pays for the goods. Or accepts the bill of exchange – commits to carry out payment in the future.

Seller receives the payment / commitment to pay. When the payment / commitment to pay has been received, the buyer’s bank delivers the goods’ documents to the client.

Useful links

A simple and cheap way to reduce business transaction risks.