Documentary collection

The documentary collection is a means of settlement when a seller, having forwarded the goods, presents commercial and/or financial documents through a bank for the buyer to pay/accept them. Having paid the commercial documents (invoices, transportation documents, certificates, etc.) or having undertaken to pay the financial documents (having accepted a draft), the buyer receives them from the bank and acquires the right to the goods.

When does the bank release the documents to the buyer?

  • The bank releases documents to the buyer against payment.
  • The bank releases documents to the buyer against acceptance of the draft.

When is it advisable to secure payment by means of a documentary collection?

  • When trading partners do not have complete trust in one another.
  • When the seller trusts the buyer's ability to pay and his intention to pay for the goods forwarded.
  • When the political and economic situation in the buyer's country is stable.

How does settlement by documentary collection work?

  1. The seller and the buyer conclude an agreement where settlement by means of documentary collection is provided for.
  2. The seller forwards the goods to the buyer.
  3. The seller presents the documents to its bank for collection.
  4. The seller's bank forwards the documents to the buyer's bank.
  5. The buyer's bank, after the seller has paid the documents or has undertaken to pay them (having accepted the draft) releases the documents to him.
  6. The buyer's bank transfers the money to the seller's bank.
  7. The seller's bank transfers the money to the seller.

Application for Documentary Credit

Application for amendment to Documentary Credit

Application for transfer to Documentary Credit