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How Documentary Collection Works

1. Sales or another contract (providing for documentary collection)

2. Shipment of goods

3. Delivery of documents and duly executed collection order to Seller’s bank (Remitting bank)

4. Sellers’s Bank (Remitting bank) delivers documents and collection instructions to Buyer’s bank (Collecting bank) (delivery to Colleting bank directly or through another bank as intermediary).

5. Buyer’s bank (Collecting bank) acts as instructed:

  • In case of documents payable at sight, makes presentation for payment without delay,
  • In case of documents payable at a tenor other than sight, where acceptance is called for, makes presentation for acceptance without delay, and where payment is called for, makes presentation for payment not later than the appropriate maturity date.
At that, presenting bank is not responsible for the genuineness of any signature or for the authority of any signatory to sign the acceptance

 

6. Payment or acceptance made by the Buyer

7. Release of documents to the Buyer

8. Payment transfer

9. Credit Seller’s account