Documentary Collection

Similar in nature to a letter of credit, a documentary collection is used in handling international trade transaction documents between the importer and exporter which will be routed through the banks. Documents will only be released to the importer after making the payment to the exporter or based on any other instructions provided by the remitting bank.

Unlike a letter of credit, banks have no obligation to make the payment against the collection documents unless the collecting bank has added its avalization to the bill.