When your company uses documentary collection as a method of payment, the importer's bank has control over the goods via the shipping documents that give access to the goods. The documents can only be delivered to the buyer after he has paid the amount due or signed a bill of exchange that falls due on a later date. Please note that banks have no payment obligations in documentary collections.
Advantages of using collection as a payment method
- The exporter’s bank monitors whether the payment is made or accepted.
- The shipping documents stay in the banking system until the collection has been paid or accepted.
- You can electronically initiate and manage your export collections.
- You benefit from better liquidity.
- They are easier to process than documentary credits.
You should be aware, however, that if the goods are addressed to the buyer, the buyer will usually be able to have them released without presenting the transport documents, with the exception of bills of lading.
For this reason, it might be prudent to address the goods to a transport firm or the buyer’s bank – although this requires the bank’s agreement.
Whenever goods are shipped, there is no guarantee of payment. You could incur storage costs if buyer fails/delays to pay.
Our direct collection service speeds up the process even more by allowing you to send the documents and the instruction letter to the buyer's bank yourself through Business eBanking on behalf of Danske Bank.
We take care of the rest of the transaction.