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Short and simple presentation of documentary collections in PPT format.
Text of Documentary Collections
- 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.
- 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).
- 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.
- 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.
- 6. Importer Remitting bank Exporter Collecting and/or presenting bank www.thebenche.com Documentary Collections Instruction Agreement Advice Collection instruction
- The banks keep on reminding the buyer until payment is settled
- 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
- From the importers point of view
- Payment to be made after the goods have been shipped