Documentary collection  – is an arrangement when goods are shipped to the buyer and necessary documents (financial or transport) are transfered to the seller’s bank with instructions of getting payment in the buyer’s bank.

Using documentary collections seller ships the goods and provides draft and documents to the bank. Using clean collection seller provides only draft without transport documents. Clean collection can serve the main documentary transaction or financial transaction.

PARTIES-PARTICIPANTS

Thruster- exporter, seller, drawer
Issuing bank  - bank of exporter, which transfers collection documents to the collection bank.
Collecting bank  - very often it is correspondent bank or agent of issuing bank, bank getting collection and providing of documents to importer
Importer  - buyer, drafter

CYCLE OF DOCUMENTARY COLLECTION

1. Buyer and Seller concludes sales-purchase agreement
2. Seller ships the goods, gets shipment documents in transport agency, provides documents to the issuing bank and requests to send documents for collection
3. Issuing bank sends collection order and documents to the collecting bank
4. Collecting bank contacts importer and requests either to make payment or to accept the bill
5. Collecting bank provides documents to importer
6. Importer provides shipment documents to transport agency and gets the goods
7. Collecting bank makes payment to issuing bank
8. Issuing bank makes payment to exporter