DOCUMENTARY COLLECTION
A documentary collection (D/C) is a transaction whereby the exporter entrusts the collection of a payment to the remitting bank (exporter’s bank), which sends documents to a collecting bank (importer’s bank), along with instructions for payment.There are four types of documentary collections as follows:
1) Documents against payment (C.a.D)
The presenting bank may only release the documents simultaneously against immediate payment.
2) Documents against acceptance (D/A)
The presenting bank may only release the documents against acceptance of a draft by the importer, e.g. on a date 180 days after the goods were dispatched.
3) Documents against letter of undertaking
The presenting bank releases the documents to the importer against a letter of undertaking, the wording of which is determined by the remitting bank or the importer. By signing the letter of undertaking, the importer undertakes to pay the collection amount on a specific date.
4) Collection with acceptance: release of documents only against payment (Acceptance D/P)
The exporter gives instructions for the drawee to accept a draft due, say, 30 days after sight. However, the presenting bank may only hand over the documents to the drawee once payment of the draft has been affected.
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