International trade procedure in which a bank in the importer’s country acts on behalf of an exporter for collecting and remitting payment for a shipment. The exporter presents the shipping and collection documents to his or her bank (in own country) which sends them to its correspondent bank in the importer’s country. The foreign bank (called the presenting bank) hands over shipping and title documents (required for taking delivery of the shipment) to the importer in exchange for cash payment (in case of ‘documents against payment’ instructions) or a firm commitment to pay on a fixed date (in case of ‘documents against acceptance’ instructions). The banks involved in the transaction act only in a fiduciary capacity to collect the payment but (unlike in documentary credit) make no guaranties. They are liable only for correctly carrying out the exporter’s collection instructions and may, if so instructed, sue the non-paying or non-accepting importer on the exporter’s behalf .
FCS also facilitates international trade transactions by providing a documentary collection facility. Under this arrangement, the supplier knows that the shipping documents will be released to the buyer against payment (DP) or acceptance (DA) of draft, based on their payment agreement.
Documentary collections are of two types:-
- Document against payment (DP) – Sight Documents
- Document against acceptance (DA) – Term Documents
Under this service shipping documents are sent to us by the Seller’s bank to be delivered to the Buyer as per their instructions.
The Seller is assured that documents are delivered to the Buyer against payment (DP documents)/ or acceptance to pay on due date (DA document) as per their terms of payment.
The Buyer is able to get the goods without making any payment until the goods are shipped by the Seller and the shipping documents are received at our end. The Buyer gets delivery of the documents as per the agreed payment terms. DA terms enable the Buyer to get credit from the supplier.
Import Documentary Collections
FCS can help you simplify the administration of your documentary import collections, so you’ll know when funding is due, track outstanding import collections, and ease reconcilement of payables.
For commercial trade transactions, FCS’s Import Documentary Collections are a simple and cost-effective alternative to Import Letters of Credit. You can:
- Manage transactions and collections in multiple currencies
- Centralize import payable information
- Receive electronic notification when import documents arrive
- Simplify the administration of commercial trade transactions
- Reassure your trading partner of prompt remittance of payment
Working on your behalf throughout the world, FCS’s efficient import collection services assure prompt payment to your supplier’s bank. With an expansive presence and recognized expertise in international trade, FCS is a world leader in trade services. In fact, we often act on behalf of both importer and exporter in a trade transaction, thus speeding processing so that imported goods can be released to you faster.
Export Documentary Collections
In today’s international credit markets, exporters often need to use their financial resources or bank relationships to affect a trade sale. Buyers in Latin America, Africa, Eastern Europe, Asia and the Middle East may be unable to obtain international credit on their own.
For commercial trade transactions, our Export Documentary Collections offer exporters an alternative payment method to letters of credit. When you ship goods to an importer, FCS retains custody of the title documents, until payment is received or expectance is obtained from the importer.
From wherever they originate, transaction proceeds are remitted to your account within 24 hours of receipt, giving you access to your funds at the earliest possible moment. Export Documentary Collections also let you:
- Centralize the management of export receivables
- Track outstanding collections
- Know when payments are made
- Improve the reconcilement and administration of your export processing
Unlike with letters of credit, the bank does not cover credit and country risk. If you’re comfortable assuming those risks, Export Documentary Collection maybe a cost-effective option.
You can generate Export Documentary Collections electronically, using FCS to transmit transaction details directly to us from your office. You can also denominate these transactions in a variety of currencies.
How Export Documentary Collections Work?
An Export Documentary Collection is a method of payment by which an exporter can collect payment from an importer through an intermediary bank, which facilitates the flow of title documents and payment.
The exporter’s bank solicits a payment, on the exporter’s behalf from an importer by sending title documents and a cover letter to the importer’s bank.
The importer’s bank advises the importer of the bill. When the importer pays the bill, the importer’s bank pays the exporter’s bank. When the exporter’s bank receives payment, it promptly credits those funds to the exporter.
