Import Bills for Collection

Do you and your suppliers consider L/C issuance to be bothersome?

Import collection is a simpler alternative to L/Cs. When your suppliers send the documents to your bank through their bankers, your bank will inform you immediately. Documents are released to you when your supplier’s payment terms are fulfilled.

How it works:

The exporter despatches their goods to you (the importer), and instructs their bank to send the shipping documents to your (the importer's) bank, along with instructions about collecting payment. The bank acts on behalf of the exporters bank to collect payment from you, or a promise that you will pay at a later date if you have agreed this with the exporter. This promise normally involves you (the importer) accepting a Bill of Exchange. Under the agreement, the bank will not release the shipping documents until payment or acceptance has been made

Key advantages

• You, the importer, pay for goods only when you are happy that the shipping documents – such as invoices, insurance certificate and bills of lading – are as stipulated in the underlying commercial contract.
• Provides you with a degree of security that, if the paperwork is correct, the corresponding shipment should be in order too.
• Useful for trading situations that require more security than Open Account but which do not warrant the expense of a Documentary Credit.
• Easy and speedy to set up, making them particularly suitable for transactions that need to take place quickly.
• Often used to bridge the gap between trading on Documentary Credits and open account, where a relationship is building up between buyer and supplier that indicates mutual trust.

There are two types of import collection, namely:

Documents against payment (D/P), where your bank will release the documents to you against full payment;

Documents against acceptance (D/A), where your bank will release the documents to you against acceptance of the bill of exchange (draft) guaranteeing payment at a later date. Also, D/A allows you to examine the goods before effecting payment.