Definitions for "Documentary Collection"
Keywords:  urc, exports, overseas, ships, draft
A method whereby the seller uses the services of his bank to ensure that the buyer only receives the shipping documents under conditions specified by the seller, ie upon payment, or upon acceptance, of the seller's bill of exchange. (see also Bill of Exchange, Cash Against Documents and URC522).
An international payment technique allowing each party to retain key elements of control and increasing the level of security of the transaction, even in the absence of a Letter of credit. The importer is not required to pay the exporter before the merchandise ordered is shipped, while the exporter is able to retain title to the goods until the importer either pays the draft ( Document against Payment, D/P) or accepts it ( Document against Acceptance, D/A). In both cases the bank acts only as an agent for the exporter, regulating the timing of the transaction and seeking payment from the overseas buyer/importer. The basis of execution of documentary collections is provided by the Uniform Rules for Collections (URC) drafted by the International Chamber of Commerce in Paris. Français: Encaissement documentaire Español: Cobro de créditos documentarios
Where you draw up a bill of exchange (see Bill of exchange), which allows you to keep control of your goods and raise additional finance. An overseas bank, acting on your bank's behalf, will only release the documents necessary for your customer to take possession of goods once formally accepts the terms of the bill. Documentary collections are typically used for exports outside the EU to customers you have an established relationship with.
a means of carrying out transactions when the parties signing an agreement trust each other sufficiently to decline the security offered by the letter of credit but are not yet prepared to release pay money