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Collections & Advising
Collections and Advising are used in lieu of a Letter of Credit when buyers and sellers want a third party document-handling entity such as ADCB involved in the transaction. Documentary collections can provide an exporter and importer with a compromise between open account trading and documentary credits. They offer the exporter a degree of security in the transaction as the Bank will have control over the goods through the title documents and can arrange for one of its overseas correspondents to release the documents only against payment or acceptance of a bill of exchange with payment at a future date.
When you choose to use documentary collection as a method of payment, the importer's bank has control over the goods via the shipping documents that give access to the goods. The documents can only be delivered to the buyer after the buyer has paid the amount due or signed a bill of exchange that falls due on a later date.
Advantages of using collection as a payment method -
- The exporterís bank monitors whether the payment is made or accepted
- The shipping documents stay in the banking system until the collection has been paid or accepted
- You can electronically initiate and manage your export collections
- You benefit from better liquidity
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