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Finance & Banking vocabulary · Trade Finance

Documentary collection

Meaning in finance & banking, with examples

nounAdvanced term

In finance & banking, documentary collection means: A trade payment method in which the exporter's bank sends the shipping documents to the importer's bank, which releases them only when the importer pays or accepts a bill of exchange.

In Turkish: vesaik mukabili tahsil, vesaik mukabili ödeme

How it is used

Cheaper and simpler than a letter of credit, but the banks do not guarantee payment. With documents against payment (D/P), also called cash against documents, the buyer pays to get the documents; with documents against acceptance (D/A), the buyer accepts a bill of exchange and pays later. The ICC's URC 522 rules usually apply.

Example sentences

  1. We ship to long-standing customers on documentary collection terms.

  2. Under the documentary collection, the importer must pay before the bank releases the bill of lading.

Common collocations

  • documentary collection
  • documents against payment
  • documents against acceptance
  • cash against documents
  • URC 522
  • letter of creditA bank's written promise to pay the seller in an international sale, provided that the seller presents the required documents, such as the bill of lading and invoice.
  • bill of exchangeA written order from one party to another to pay a fixed amount to a named person, either on demand or on a set future date, used mainly in trade.
  • trade financeBanking products that help importers and exporters pay and get paid safely, and that finance goods while they are produced, shipped or sold.
  • correspondent bankA bank that provides services, such as making payments or handling trade documents, for another bank in a country or currency where that bank has no presence.

This word in other fields

The same English word can have a different meaning in another field:

More terms: Trade Finance

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This page explains English vocabulary for learners. It is not financial advice.