International trade procedure in which a bank in the importer's country acts on behalf of an exporter for collecting and remitting payment for a shipment. The exporter presents the shipping and collection documents to his or her bank (in own country) which sends them to its correspondent bank in the importer's country. The foreign bank (called the presenting bank) hands over shipping and title documents (required for taking delivery of the shipment) to the importer in exchange for cash payment (in case of 'documents against payment' instructions) or a firm commitment to pay on a fixed date (in case of 'documents against acceptance' instructions). The banks involved in the transaction act only in a fiduciary capacity to collect the payment but (unlike in documentary credit) make no guaranties. They are liable only for correctly carrying out the exporter's collection instructions and may, if so instructed, sue the non-paying or non-accepting importer on the exporter's behalf
RNR-TCCL also facilitates international trade transactions by providing a documentary collection facility. Under this arrangement, the supplier knows that the shipping documents will be released to the buyer against payment (DP) or acceptance (DA) of draft, based on their payment agreement.
Documentary collections are of two types:-
- Document against payment (DP) - Sight Documents
- Document against acceptance (DA) - Term Documents
Under this service shipping documents are sent to us by the Seller’s bank to be delivered to the Buyer as per their instructions.
The Seller is assured that documents are delivered to the Buyer against payment (DP documents)/ or acceptance to pay on due date (DA document) as per their terms of payment.
The Buyer is able to get the goods without making any payment until the goods are shipped by the Seller and the shipping documents are received at our end. The Buyer gets delivery of the documents as per the agreed payment terms. DA terms enable the Buyer to get credit from the supplier.