Documentary Collection of import-related payments

The collection of import-related payments generally works in the following way:

After shipping the goods, your foreign supplier passes documents such as invoice, transport and insurance papers to its bank with special instructions for their use. The foreign bank then forwards the documents to us. Depending on the instructions given, we will pass the documents on to you after the documents have been paid for or after you accept a bill of exchange drawn on you. Subject to the goods being addressed to us, we will then release them to you. The transport document (bill of lading) handed over to you enables you to dispose of the goods.

The advantage of the collection method over an import letter of credit is that you are not subject to any separate obligations outside the underlying transaction. As such, you are under no obligation to the bank to accept the collection, i.e. to make payment or accept a bill of exchange.