Documentary Collection is governed by
the Uniform Rules for Collection, ICC Publication No. 522 commonly known as
URC522.
Types of documentary collection:
DP (Documents against payment) Documents
are released to the buyer on payment of the bill
DA (Documents against acceptance)
Documents are released to the buyer after he accepts the bill of exchange and provides an undertaking to pay the bill
on the due date.
Parties involved in documentary
collection:
Seller (also known as Drawer/Exporter/Principal): The seller ships the
goods and submits the documents to his bank with instructions for collection of
payment.
Remitting
bank: This bank is the seller’s bank. The remitting
bank sends the documents to the buyer’s bank (Collecting/Presenting bank)
Collecting
bank: This bank is any bank other than the
remitting bank which is involved in the collection process. A collecting bank
forwards the documents and collection instructions to the Presenting bank. In case this bank presents the documents
directly to the buyer, then it also becomes the Presenting bank.
Presenting
bank: This
bank is the buyer’s bank. As per definition provided by URC 522, this is also a
collecting bank. The presenting bank presents the documents to the buyer for
payment or acceptance depending on the collection instruction.
Please note, in most cases the
collecting bank also acts as the presenting bank.
Buyer (also known as Drawee/Importer): The buyer pays the bill in case of
a sight bill or accepts the bill of exchange in case of a usance bill. The
buyers receives the documents on payment/acceptance from the Presenting bank.
