Documentary collection refers to a written order whereby an exporter instructs his Bank to forward to an importer the presented documents which can be used as the basis for the importer to dispose of the goods, but only if certain terms of collection are met (upon payment, accepting of a bill of exchange or upon meeting other set conditions).
Advantages of documentary collection include a simple procedure, low costs and equal risk for business partners.
However, in order for you to decide to use documentary collection, there are two basic prerequisites that must be fulfilled:
Depending on your requests and needs, you can use the following types of documentary collection:
- participants in international trading affairs must know each other as reliable business partners, and
- economic, political and legal environment in the buyer's country must be stable and without any specific import and/or currency restrictions.
- Documents against Payment (D/P);
- Documents against Acceptance (D/A);
- Acceptance Documents against Payment (Acceptance D/P).