documentary collections

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Post on 18-Nov-2014




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Short and simple presentation of documentary collections in PPT format.


  • 1. Documentary Collections
  • 2. 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.
  • 3.
    • 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
  • 4.
    • 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
  • 5.
      • Banks handle collections under URC 522, 1995 rev. issued by International Chamber of Commerce ( )
      • Remitting bank is always referring to the above mentioned rules in their instructions to the collecting bank.
    Documentary Collections
  • 6. Importer Remitting bank Exporter Collecting and/or presenting bank Documentary Collections Instruction Agreement Advice Collection instruction
  • 7.
    • 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
  • 8.
    • From the importers point of view
      • Pros:
        • Simple handling
        • Payment to be made after the goods have been shipped
        • Low cost
    Documentary Collections