DOCUMENTARY-COLLECTION

Bank documentary collection — cheaper than an LC.

Definition

Documentary collection involves the bank only as agent (no payment undertaking), unlike an LC. Types: D/P (Documents against Payment) — sight payment against documents ; D/A (Documents against Acceptance) — bill acceptance. SWIFT MT 400/410.

Origin

URC 522 (Uniform Rules for Collections) published by ICC in 1995.

Example in context

An Indian exporter sends BL + invoice via its bank ; the buyer collects docs against payment (D/P).

Related terms

• Letter of Credit — more secure instrument.