Transactions in export
As the seller or exporter, you are the principal who presents the documents to UBS with an instruction for collection of payment. If you have already produced and dispatched the goods without first securing payment, documentary collection can offer a limited protection against non-payment after the event.
The key points for the exporter:
In order to avoid any problems or delays when it comes to taking delivery of the goods and customs clearance, the shipping documents must comply with the relevant import regulations.
The documentary collection does not cover the risk of non-payment of the documents or failure to honour the draft or letter of undertaking at maturity.
If (in the case of air and/or land freight) the documents are sent to the drawee's address, there is a risk that the latter will be able to access the goods prior to payment.
Where acceptances and letters of undertaking are concerned, you, as the principal, are dependent on the integrity of your trading partner. Should they fail to honour their obligations in this respect, it can often prove difficult to enforce the claim. The legislation governing drafts in the country of purchase will apply.
Payment may be delayed due to exchange control regulations in the country of purchase.
If you intend to allow part payment and/or prior inspection of the goods by the drawee (best avoided wherever possible), you will need to issue specific instructions to this effect.
The collection instruction, which the principal presents to his bank along with the agreed documents, should specify all the required terms and conditions for the collection of the debt and delivery of the presented documents.
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