Documentary Collection – is a form of trade finance. It defines the way how the Buyer should pay for the imported goods.
The procedure includs the following steps:
- The Buyer and the Seller conclud the contract and indicate the documentary collection as a method of payment.
- The Seller sends the goods to the Buyer and submits the export documents to his bank.
- The Seller’s bank sends the export documents to the Buyer’s bank.
- The Buyer pays for the goods and in return he gets the export documents from his bank.
- The Buyer’s bank sends the payment to the Seller’s bank.
- The Seller collects the payment and the Buyer collects the imported goods.
Ther are two types of Documentary Collection:
- Documents against payment – the Buyer gets the export documents at the moment of making payment for the goods.
- Documents against acceptance – the Buyer accepts the specified date of making payment and then gets the export documents.