A documentary collection is a form of settlement widely used in international trade. The seller retains control over the goods and the shipping documents until the presenting bank collects payment for the goods from the buyer. However, unlike a documentary credit, banks are under no obligation to make payment. The seller relies on the buyer’s ability and willingness to pay.
This form of settlement is used when there is a certain level of confidence between the counterparties involved in a commercial contract.
The parties benefit from a convenient and secure way of handling their imports and exports at reasonable cost.
Collections are subject to the Uniform Rules for Collections (1995 Revision, ICC Publication No. 522).