Documentary collections

Documentary Collections and letters of credit help with payments in trade. With Documentary Collections, the bank gives delivery documents after it receives payment. This gives people or companies who sell goods to other countries more security than an open bill. It is also cheaper and simpler.

Documentary Collections work well when exporters and importers trust each other. The bank works as a manager for someone else's money or property. The seller gives export documents to the bank that sends money. The bank sends these documents to the buyer's bank only after payment or agreement to a Bill of Exchange.

There are two types of Documentary collections:

• Documents against Payment Collection (D/P): 
  The importer receives the delivery documents only against payment.
• Documents against Acceptance Collection (D/A): 
  Delivery documents are handed over against acceptance of a Bill of Exchange or a promise of payment.