International Banking
Collections

Every time a merchant mails a statement to a customer, a collection is taking place. However, when an international sale is made, the collection can be processed through intermediaries (the importer's and exporter's banks).

The collection process requires the presentation of commercial documents and possibly documents of title - for the express purpose of obtaining either payment or a commitment to pay on a future date. These two types of collections are called:

Clean Collection

A term used to describe the process of presenting a negotiable instrument to the drawee or maker for the purpose of obtaining payment or acceptance. The term indicates that shipping documents are not incorporated in the collection process.

Documentary Collection

A banking term referring to service offered by banks to sellers in order to expedite payment of a sale of merchandise on an international basis. This service is usually transacted by two banks utilizing the seller's shipping documents, with or without drafts.

Direct Collections

An international banking term referring to a service offered by banks to their exporters in order to expedite the processing of documentary collections and accelerate payment. Direct Collections allow the customer to directly forward the shipping documents to the importer's bank on a collection basis. The exporter's bank provides the customer with a multi-part form with the bank's letterhead and logo. The exporter then forwards the collection letter and documents to the collecting bank. The exporter's bank is notified of the direct collection and is charged with the responsibility of chasing the payment. Please Contact Us to sign up for this service.

Export/Import Collections

Export/Import Collections requires the presentation of commercial documents and documents of title in return for payment. By using documentary collections, the seller is assured that documents (i.e., bills of lading, commercial invoices, air waybills) will not be released until the collection instructions have been complied with. These documents are then released to the buyer upon either payment or acceptance.

To see advantages for both the exporter or importer, click on Exporter Advantages or Importer Advantages. And if there are any words needing an explanation, see our Glossary.