Documentary collection

Put simply, documentary collection is similar to cash on delivery. This means that if the documents are not provided, no payment is made and the buyer does not receive the goods.

Documentary collection works best and most securely with ocean bills of lading (B/L), which are negotiable documents. For transport by air, road or rail, waybills can be issued to the buyer's bank to maintain control of the goods. You must consult the foreign bank first.

The exporter's bank forwards the documents to the buyer's bank, which releases them to the buyer against acceptance of a bill of exchange (Documents against Acceptance, D/A). The bill of exchange serves as a promissory note and may have a term of several days, allowing the seller to extend credit to the buyer. If the exporter requires additional security from the buyer, the buyer's bank can provide a financial guarantee by avalising the bill of exchange.

We encourage you to contact your bank's Trade Finance department if you are considering documentary collection. Under market insights in 'Go International', we provide information on whether this payment method is commonly used in your target market.