Scribd Logo
Upload

Welcome to Scribd!

  • Documentary Collections

    Uploaded by

    Sudershan Thaiba
    237 views8 pages
    Documentary collections involve banks carrying out instructions to pay under financial and commercial documents, with no obligations or responsibilities for payments. There are two types: documentary against payment (D/P), where payment is made upon receipt of documents, and documentary against acceptance (D/A), which allows a credit period. Banks handle collections according to ICC rules. The process involves instructions from exporter to remitting bank to collecting bank to importer, with advice provided along the way. Documentary collections provide simple handling and payment assurance, but banks undertake no risks for exporters.

    Original Description:

    Documentary Collections

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document
    Documentary collections involve banks carrying out instructions to pay under financial and commercial documents, with no obligations or responsibilities for payments. There are two types: documentary against payment (D/P), where payment is made upon receipt of documents, and documentary against acceptance (D/A), which allows a credit period. Banks handle collections according to ICC rules. The process involves instructions from exporter to remitting bank to collecting bank to importer, with advice provided along the way. Documentary collections provide simple handling and payment assurance, but banks undertake no risks for exporters.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pdf or txt
    237 views8 pages

    Documentary Collections

    Uploaded by

    Sudershan Thaiba
    Documentary collections involve banks carrying out instructions to pay under financial and commercial documents, with no obligations or responsibilities for payments. There are two types: documentary against payment (D/P), where payment is made upon receipt of documents, and documentary against acceptance (D/A), which allows a credit period. Banks handle collections according to ICC rules. The process involves instructions from exporter to remitting bank to collecting bank to importer, with advice provided along the way. Documentary collections provide simple handling and payment assurance, but banks undertake no risks for exporters.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pdf or txt
    of 8

    Documentary Collections

    Documentary Collections

     The basis for a Documentary Collection:


    – The buyer does not get access to the merchandise until
    he has paid or promised to pay.
    Documentary Collections
     Definitions:

    – Documentary Collection - banks carry out instructions to pay


    under financial/commercial documents. Banks take no
    obligations or responsibility for payments.

    – Financial documents - drafts, promissory notes, checks,


    receipts etc.

    – Commercial documents - invoices, forwarders certificates or


    receipts, Bills of Lading.

    – A documentary collections can either be paid at sight -


    documentary against payments (D/P) - or there could be a
    credit period involved - documentary against acceptance (D/A).
    Documentary Collections

     When to apply a documentary collection?

    – Exporter – to ensure payment from importer prior to the


    release of documents/goods (only for D/P).

    – Importer – to ensure shipment of purchased goods prior to


    payment.
    Documentary Collections

    Banks handle collections under URC 522, 1995 rev. issued by


    International Chamber of Commerce (www.iccwbo.org)

    Remitting bank is always referring to the above mentioned


    rules in their instructions to the collecting bank.
    Documentary Collections

    Agreement


    Exporter Importer

    Instruction
     Advice

      


    Collection
    instruction 
    Remitting bank Collecting and/or presenting bank

    www.thebenche.com
    Documentary Collections
     From the exporters view:

    – Pros:
    • Simple handling
    • The banks keep on reminding the buyer until
    payment is settled
    • Low cost

    – Cons:
    • The buyer may choose not to accept the document
    • The banks do not undertake any risk on behalf of the
    exporter
    • Problems and cost to re-ship the merchandise if the
    buyer do not accept the documents/merchandise
    Documentary Collections
     From the importers point of view

    – Pros:
    • Simple handling
    • Payment to be made after the goods have been shipped
    • Low cost

    You might also like