Documentary collection
A transaction where a bank releases commercial documents to the buyer against payment or acceptance of a draft, without any bank payment undertaking.
A documentary collection is a payment technique where the seller entrusts their bank (remitting bank) with commercial documents, instructing it to forward them to the buyer's bank for release against payment or acceptance.
This operation is governed by the Uniform Rules for Collections (URC 522) of the ICC. Unlike a letter of credit, banks have no payment obligation: they act solely as agents.
Two main variants exist:
- D/P (Documents against Payment): release against cash payment
- D/A (Documents against Acceptance): release against acceptance of a time draft
Collections are less expensive (0.1 % to 0.5 %) but offer less protection. The seller remains exposed to the risk of refusal by the buyer. Suitable for established relationships and moderate-risk countries.