You send us the trade documents intended for the importer, with instructions about the conditions that need to be satisfied before we send them to your client. Next, we send the trade documents with the collection terms to your client’s bank. This bank will only be allowed to hand the trade documents over to your client once all the conditions have been satisfied.
A Documentary Collection is particularly well suited for transactions where goods are shipped by sea and the transport document is a bill of lading. This is a document of title, meaning that the holder of the original document can demand the goods specified on it. As long as this document has not been handed over to the importer, you keep control of your goods.
Please note: you may lose control over the goods if, for example, they are sent by air freight addressed to the importer or when you have sent one or multiple original copies of a bill of lading to the importer separately, i.e. not as part of the Documentary Collection transaction.
There is a risk of your client refusing to pay while the goods have already shipped. If that happens, you will be liable for the costs, such as the shipping costs. If the goods have already arrived at the destination and payment is not made, you will incur costs recovering the goods and/or selling them elsewhere. These are reasons why a Documentary Collection is mainly a good option if you trust your client sufficiently.
What happens if the Documentary Collection remains unpaid? You can ask us to send a tracer to the collecting bank to check the status of the payment. We charge a fee for sending tracers. See our overview of fees for details. In some cases, you can also issue a deed of protest.
If you’re looking for even greater security, a Letter of Credit might be the right option for you.
For more information, call our Trade Finance Operations on +31 (0)10 402 54 44 (local rates apply).
