Documentary collection Payment security in international transactions

Do you know and trust your foreign business partner? And are there no special risks lurking in the economic environment? Then documentary collection is a good compromise – it is more secure than open-account payment terms and more cost-effective than documentary credit. When using documentary collection it is important to know that the participating banks do not assume any financial responsibility for the transaction; they act in a fiduciary capacity only.

Documentary collection

When you export goods and services, you would like to have the assurance that your delivery will be paid – on the other hand, you want to minimize the administrative effort and income-reducing costs associated with this payment security. That is why documentary collection is a popular and proven middle course between costs and security.

Documentary collection provides more security than a delivery with open-account payment terms. It does not cover all risks, however – the buyer, for example, may refuse to accept the documents. In addition, the liability of the participating banks is limited to the forwarding and delivery of the documents against payment; political and credit risks are not covered.

That is why we recommend using documentary collection only if the business partners trust each other, if there is no doubt about the buyer's willingness to pay, and if stable conditions prevail in the import country.

Documentary collection or documentary credit? 

Does documentary collection offer enough payment security or would a documentary credit ultimately be a better solution? How stable are the political, economic and legal conditions in the import country? Which form of documentary collection is most suitable? We would be glad to analyze your situation, recommend the optimum solution and open the right documentary collection (or documentary credit) for you.

If you know your business partner well and have no doubt about his willingness (and ability) to pay, documentary collection provides adequate payment security.

Documentary collection offers you a welcome form of delivery security – and reduces the income of your foreign supplier less than a documentary credit. 

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