Documentary encashment

Collection is a form of settlements between Buyer and Seller, when the Buyer's bank collects the amount that the Buyer must pay against the relevant documents received from the Seller's bank. Documentary collection is mostly used in the case of a trusting and long-term relationship between Buyer and Seller and if parties are ready to use collection instead of the letter of credit.

Depending on the type of documents, collection is classified as follows:

Clean collection is the collection of financial documents (bills, cheques, payment receipts, etc.) that are used to receive payments.

Documentary collection is the collection of financial documents that are accompanied by commercial documents (invoices, transport, insurance documents) or commercial documents that are not accompanied with financial documents.

Advantages

• Simple procedure;

• Low cost;

• Greater payment reliability compared to a bank transfer;

• Sending documents through banks guarantees their safety until importer’s payment;

• Settlements with regular partners become more flexible.