Documentary Collection

Table of Contents
1. DOCUMENTARY COLLECTION 2

2. THE MECHANISM OF DOCUMENTARY COLLECTION 2

3. DEFINITION OF A DOCUMENTARY COLLECTION DOCUMENTARY 2

4. TYPES OF DOCUMENTARY COLLECTION 2

4.1. Documents against Payment (DP) 2

4.2. Documents against Acceptance (DA) 2

5. PARTIES IN A DOCUMENTARY COLLECTION TRANSACTION 2

5.1. Importer 2

5.2. Exporter 2

5.3. Seller/Exporter 3

5.4. Remitting Bank 3

5.5. Collecting/Presenting Bank 3

5.6. Buyer/Importer 3

6. Documentary Collection Documents 3

7. THE FLOW OF DOCUMENTARY COLLECTION (DOCUMENTS AGAINST PAYMENT) 4

7.1. Steps 4

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 Documentary Collection
1. Documentary Collection
A documentary collection (D/C) is a transaction whereby the exporter entrusts the collection
of a payment to the remitting bank (exporters bank), which sends documents to a collecting
bank (importers bank), along with instructions for payment. Funds are received from the
importer and remitted to the exporter through the banks involved in the collection in
exchange for those documents. D/Cs involve using a draft that requires the importer to pay
the face amount either at sight (document against payment) or on a specified date (document
against acceptance). The draft gives instructions that specify the documents required for the
transfer of title to the goods. Although banks do act as facilitators for their clients, D/Cs offer
no verification process and limited recourse in the event of non-payment. Drafts are generally
less expensive than LCs.

2. The Mechanism of Documentary Collection

3. Definition of a Documentary Collection Documentary
Collection is the process in which the seller instructs his bank to present documents in
relation to a trade deal to the buyers bank to present or release documents to the buyer
against certain conditions.
Documentary Collection is subject to the Uniform Rules for Collection, International
Chamber of Commerce Publication No. 522 (URC522)

4. Types of Documentary Collection

There are two main types of Documentary Collection:

4.1. Documents against Payment (DP)

The bank will release documents to the buyer upon his payment of the transaction.

4.2. Documents against Acceptance (DA)

The bank will release documents to the buyer upon his acceptance of a bill of exchange that
undertakes to pay at a determinable future date.

5. Parties in a Documentary Collection Transaction

5.1. Importer
For customs purposes, the party who makes (or on whose behalf an agent or broker makes)
the import declaration, and who is liable for the payment of duties (if any) on the imported
goods. Normally, this party is named either as the consignee in the shipping documents
and/or as the buyer in the exporter's invoice.

5.2. Exporter
For customs purposes, the party who makes (or on whose behalf an agent or broker makes)
the export declaration. The exporter sells its goods to someone in another country, known as
the importer.

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5.3. Seller/Exporter
The seller/exporter is also known as the Drawer in documentary collection. The
seller/exporter will ship the goods to the buyer based on the sales contract and submit
documents to his banker with instructions for collection of payment.

5.4. Remitting Bank

The remitting bank is the seller/exporters bank. It will send the documents to the buyers
bank with instructions for collection of payment. Upon receipt of payment from the buyers
bank, the remitting bank will credit the net proceeds to the seller/exporters account.

5.5. Collecting/Presenting Bank

The collecting bank is the agent of the remitting bank in the buyers country, its main role is
to forward the documents and collection instructions to the buyers bank.
The presenting bank is the bank that presents the documents to the buyer for payment or
acceptance based on the collection instructions. Upon receipt of payment from the buyer, the
presenting bank will This document is for information only and is designed to provide you
with a general description of the trade products and services in Singapore. The information in
this document relates to services offered to clients as of April 2010 and may be subject to
change in the future; it is purely illustrative in nature and therefore does not contain or cannot
result in any contractual or non-contractual obligation or liability of United Overseas Bank
Limited and/or any of its affiliates. United Overseas Bank Limited Co. Reg No. 193500026 Z
Page 2 of 3 pay the net proceeds to the collecting bank, which will in turn pay the remitting
bank after deducting its own charges.
A collecting bank may also become the presenting bank in the buyers country.

5.6. Buyer/Importer
The buyer/importer is also known as a drawee in documentary collection. The buyer will pay
the documents or accept the bill of exchange. In return, the buyer/importer will obtain the
documents to allow him to clear his goods.

6. Documentary Collection Documents

Bill of Exchange (2 copies)
Commercial Invoice (6 copies) Made by Exporter
Full set of B/L (3/3 copies)
Pricing list (As per requirement)
Weight List (As per requirement)
Inspection Certificate (As per requirement)
Certificate of origin (As per requirement)

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7. The Flow of Documentary Collection (Documents
against Payment)

7.1. Steps
Step 1: Seller ships the goods to the buyers country as per the sales contract.
Step 2: Seller presents documents to the Remitting Bank with clear instructions for collection
of payment.
Step 3: Remitting Bank forwards the documents and collection instructions to the
Collecting/Presenting Bank.
Step 4: Collecting/Presenting Bank presents documents to the buyer for payment.
Step 5: Buyer pays for the document or take up import financing.
Step 6: Collecting/Presenting Bank remits the net proceeds to the Remitting Bank after
deducting its own charges.
Step 7: Remitting Bank credits the net proceeds into the sellers account after deducting its
own charges

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