How can I use the product?
By means of a documentary collection, you are protected from possible risks related to international and domestic business contracts.
We can recommend using this instrument especially in the following cases:
- There is no doubt as to the importer's willingness to pay or his/her solvency, and you know him/her as a business partner whose good payment ethic is well-known and undoubted.
- For some reason, there is no possibility to have a documentary letter of credit issued.
- The political, economic and legal environment in the importer's country is considered stable.
- There have been no restrictions with respect to the import of goods from the exporter's country.
Based on your instructions, we shall handle the entrusted documents related to the goods take-over; they will be handed over to the customer as soon as he/she fulfils the collection actions - in most cases, after the payment or acceptance of the bill of exchange or after a combination of both of these conditions. The conditions for the document hand-over can be negotiated between the exporter and the importer at the contract's closing.
Types of documentary collections:
- Documentary collection with the condition - D/P
(documents against payment)
If this condition is applied, the documents will be handed over to the customer against a direct payment, i.e. the hand-over and execution of a payment order. - Documentary collection with the condition - D/A
(documents against acceptance)
In this case, we speak of the so-called "exchange or supplier credit". The documents shall be handed over to the customer against the acceptance of a bill of exchange or against the issuance of a house bill.
What are my benefits?
- Documentary collection offers you the possibility to secure your financial transactions upon the execution of your business contracts.
- The financial means are not blocked in the account and it is possible to pay after the take-over of the collection documents at the moment when the delivery has arrived to its destination already.
- The collection documents are handed over to the customer at the moment when all the collection conditions are fulfilled from his/her side.
- Bank employees take care of the collection receivable from the moment of the document take-over, and in regular claims, they remind the debtor of his/her obligation.
What else do I need to know?
The contract on documentary collection has the form of a collection order. This order must include all the data necessary for the smooth course of the operation, i.e. the date, the names of the buyer and the seller, a list of documents, the collection amount in the respective currency, the condition of the document hand-over, instructions concerning the payment of the bank expenses and collection revenue, etc. In most cases, the exporter will submit to his/her bank all the necessary documents agreed to in the contract together with the collection order. The collection order must always be comprehensible and unambiguous.
The fees and commissions to the bank are negotiated in the contract and are derived from the actual expenses and costs. For further information, please take a look at our valid "List of Charges and Commissions" or the "List of Charges and Commissions for Correspondent Banks".
Collection expenses are in most cases determined as a percentage of the collection amount. They are increased in the event when the submitting bank enters the obligation, i.e. in the case of an aval bill, when the bank evaluates the risk grade of entering into the client's obligation, as in the case of guarantee collections.
The processing of documentary collections is ruled by the "Uniform Rules for Collections" issued by the International Chamber of Commerce in Paris.
