More about documentary collections
Collections offer importers the following advantages:
- A payment or a commitment to pay is made only upon receipt of the relevant documents by your bank
- You can decide not to accept or pay the collection
- The importer's bank will effect payment on the importer's behalf rather than the importer having to make payment by international money transfer or bank draft
- A more simple and cheaper alternative to a documentary credit
Collections offer exporters the following advantages:
- 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 obtain better liquidity
- They are easier to process than documentary credits
Collections are subject to a set of international rules entitled Uniform Rules for Collections (URC), ICC Publication No. 522, published by the International Chamber of Commerce (ICC) in Paris.
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The documentary credit is one of the safest payment methods used in international trade. It helps to manage risks related to foreign trade, be it imports or exports. It is generally used for long-distance transactions or when the purchaser and seller of the goods do not know each other well and need a trustworthy intermediary to complete the transaction.
Guarantees help to control and manage risks arising from business activity. Guarantees aim to offer the holder a sense of security and financial compensation if their contractual partner fails to fulfil their obligations.
Factoring provides companies with flexible supplementary financing that corresponds to their actual sales volume. This way, companies can take advantage of unexpected sales opportunities that they would not normally be able to finance with their own funds.