Documentary collection is a method of payment for your overseas transactions (IMPORT/EXPORT).
It is an operation whereby, according to its indications, the exporter instructs its bank to collect a sum due or a buyer accepts a commercial bill in exchange for delivery of commercial documents (invoices, transport documents, property deeds …). These are intended for customs clearance and may or may not be accompanied by financial documents (bills of exchange, promissory notes, cheques or other similar instruments for payment of a sum of money).
Documentary delivery may take two forms:
Documents in exchange for payment (D/P) the overseas correspondent bank of the exporter’s banker, will hand over the documents only for immediate payment.
Documents in exchange for acceptance (D/A) the overseas correspondent bank of the exporter’s banker, will only give the documents to the buyer in exchange for the buyer accepting one or more bills payable on a later due date. The exporter may be able to request the bank’s approval of the bills in order to avoid the risk of insolvency. To be effective, this request must be included in the collection order.