Documentary Collections

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• Trade Finance Services
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• Documentary Collections

Understanding documentary collections

Documentary Collection, in the world of trade finance, is a means to facilitate the payment mechanism. Documentary Collection is considered to be one of the simplest and quickest tools to facilitate international trade payments.

In this mode, the exporter passes on the documents related to the shipment to their bank, post which the bank of the exporter passes on the documents to the importer bank.

Documents against payment collection

Now the importer banks notify the buyer regarding the consignment and esquire about the payment details. The importer bank passes on the documents, like bills of lading only after the receipt of the payment. This is called a collection against payment.

Documents against acceptance collection

There is a second scenario as well where the importer does not have to pay ‘at sight’. In this case, the import provides some sort of guarantee for deferred payments and accepts the documents. Such a form of negotiation is called collection against acceptance.

Both the collecting and remitting bank, representing the importer and the exporter respectively, do not bear any risk. They just handle the flow of documents. This is one of the crucial aspects that need to be taken into account in the documentary collection process.

Why Emerio Banque

Emerio Banque has been handling the international trade for clients relating to documentary collections for a long while now. We instill faith in the exporter that the transfer of documents will only be made after the payment is received or draft is accepted by the importer.