COLLECTION“Collection” means the handling by banks, on instructions received, of documents in order to obtain acceptance and /or payment. The documents are attached to an application form that the exporter presents to its bank. The latter makes out a collection order and, as a rule, passes it over to its correspondent bank in the country of the importer. The correspondent bank or some other bank called “collecting” delivers the documents to the importer against payment and /or acceptance. Here is the diagram of a collecting order:
Exporter BANK BANK Importer
Banks concerned with collection do not accept responsibility for payment or acceptance. In carrying out collection banks adhere to their own practice and ICC Uniform Rules for Collections accepted by most of commercial banks. Collection may be documentary or clean. The collection of commercial documents or the collection of financial documents accompanied by commercial ones is called documentary. The collection of financial documents only is called clean. Invoices, bills of lading, waybills and certificates are commercial documents, whereas bills of exchange, promissory notes, cheques, payment receipts are financial ones.
|
DRAWER/ REMITTING COLLECTING DRAWEE/
