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Documentary collection

Documentary collection

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The documentary collection is a mode of payment in the international trade. In this case the Bank is obliged to receive the funds sent to the latter’s account for the supply of goods or services provided in compliance with the customer’s (seller’s) order or the Bank does not assume any payment obligations, but takes the role of the sender of documents instead.

Documentary collection is a payment instrument whereby the exporter (seller) sends documents to the importer (purchaser) through the bank in order to get payment. The bank does not assume any payment obligation and plays the role of an agent/document remitter only․

Documentary collection is appropriate to use, if you trust your purchasing partner, but you want to control payment for you goods.

 Trade finance online training for clients

Types of documentary collections

Below are the types of documentary collection by their payment mode

  • Documents against payment (D/P). Within the scope of the documentary collection the bank transfers the documents received from the issuing bank to the debtor for payment. Under this type of the documentary collection, the seller’s bank authorizes the buyer’s bank to provide the title documents only after the buyer has paid in exchange for the goods.
  • Documents against acceptance (D/A). Within the scope of the documentary collection the bank transfers the documents received from the issuing bank to the debtor in exchange for the promissory note from the latter. This type of the documentary collection is applied when there is an arrangement between the buyer and seller on the delay of payment. The buyer receives the title documents in exchange for the written promise, on the condition that the payment for those goods will be made in future.
Advantages of the documentary collection

Advantages of the documentary collection for the seller (exporter)

  • This is a much more secure option to get payments, particularly during sea freights, when original bills of lading are not handed to the buyer unless the latter does not pay the sum or accepts the promissory note.
  • It is possible to demand a payment guarantee of the promissory note accepted by the buyer’s bank.

Advantages of the documentary collection for the importer

  • This option provides an opportunity to make payment for goods or accept a bill after getting familiar with the sipping documents
  • Comparatively low bank rates are often applied due to the less complexity of the transaction and simplified document processing
  • The bank is ready to finance transactions in case meeting relevant requirements.
Conditions
TRANSACTION TYPE FEES
Documentary collection issued upon customer request (Seller’s collection)
Issuing collection orders: verification and delivery of documentary collection

0,25%, minimum AMD 30,000 and maximum AMD 75,000

Amending terms of documentary collection order, including cancellation thereof AMD 30,000
Documentary collection issued in the name of customer (Buyer’s collection)

Notification on documentary collection order (or amendment thereto)

AMD 15,000

Acceptance/payment of documentary collection order

0,25%, minimum AMD 30000 and maximum AMD 60,000

Documentary collection issued, however, return of documents not paid by a customer to the correspondent bank

AMD 35,000

Transfer of collection documents without acceptance or payment condition

AMD 25,000

-commission fees of correspondent banks and postage shall be charged additionally

-incomplete quarter shall be deemed complete

Loan amount

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Annual interest rate

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Financial assistant
ABC finance

Page updated 02.05.2019 | 13:31

In case of discrepancy between Armenian and English versions of the information, the priority is given to the Armenian version.