The seller ships the goods and then hands the documents relating to the goods to their bankers requesting that they collect the payment. The banks in the country of the seller and the country of the buyer work with each other to try to ensure that the documents are not released until payment has been made or the buyer has promised to pay.

The documents may be handled as 'Documents against Payment' (sometimes known as Cash against Documents) in which case the documents are not released until the buyer has paid for them. Alternatively the documents may be handled as 'Documents against Acceptance' in which case the documents are accompanied by a 'Bill of Exchange'. This is signed as accepted by the buyer giving an undertaking to pay.

Benefits

For the seller

Convenience - your bank will act for you to collect the payment using the services of another bank in an overseas country
Control - of the documents relating to the goods, which may include documents that give control over the goods. This will usually be protected by the banks involved
Reduced risk - lower risk than dealing on 'Open Account' or credit terms with a buyer
Ease of use - you do not need a bank facility to use documentary collections
Finance - the seller may be able to get finance for their overseas sales
Guarantee - if the buyer and their bank agree, the Bill of Exchange may be accepted by the buyer and by their bank. This is know as an 'Avalisation' and gives a bank guarantee of payment

For the buyer

Improved cash flow - you can defer payment for the goods until the documents relating to the goods arrive
Security - you will be made aware of the documents that have been submitted before you decide to pay or accept to pay
Favourable credit terms - you may be able to get better credit terms from your supplier than if you trade on 'Open Account' terms
Convenience - you may be able to get finance linked to the documentary collection

Features

The banks deal in the documents and not in the goods themselves. Obtaining the documents does not necessarily guarantee the safe arrival or quality of the goods
In most cases the banks attempt to collect the payment but they do not guarantee payment
Personal attention - dedicated Relationship Partner who can make decisions - fast

Complementary Solutions

Important facts

What it costs

Standard charges apply but may be individually negotiated - speak to your International Trade Partner for more details

Terms and conditions

Documentary Collections are handled in most cases subject to Uniform Rules for Collections (URC) recognised internationally. This set of rules is produced by the International Chambers of Commerce
Most banks will expect you to have an account opened before they will handle a documentary collection for you

Yorkshire Bank is a trading name of Clydesdale Bank PLC. Registered in Scotland (No. SC001111). Registered Office: 30 St Vincent Place, Glasgow, G1 2HL.

Documentary Collections

Export Letters Of Credit

Foreign Currency Call Deposit

Foreign Currency Current Account

Foreign Drafts

Import Letters Of Credit

Import Loan