After sending goods out of the country, exporters will get a B / L or bills of lading from freight forwarding companies, and this B / L serves to collect goods at the destination port. Furthermore, exporters prepare other documents such as drafts, invoices, packing lists, weight lists, COOs etc. for further sending to importers, so that importers can collect goods at the destination port.
Exporters, in sending documents to importers, can be done in two ways:
Exporters send and bill themselves to importers
Exporters send documents and collect directly to the importer, under normal conditions, the importer after receiving the document will immediately pay the exporter, so the exporter is not harmed. But what often happens in practice, the importer after receiving the document will immediately take the goods first and a few days / months and then will pay to the exporter. In this case, it is clear that exporters are disadvantaged, and it is difficult for exporters to carry out investigations.
Exporters collect and send documents through the Bank
Exporters can ask the “BANK” to send documents and collect bills to importers, and if this is done then this process is called “DOCUMENTARY COLLECTION” which is the activity of sending documents and collecting to overseas importers carried out by banks at the request of exporters .
For more details, consider the following picture:
Caption :
- Exporters and importers contract the sale and purchase of goods
- Exporters ship goods overseas by sea and obtain original B / L evidence from shipping companies transporting goods.
- Exporters prepare other documents such as invoices, packing lists, weight lists etc., and submit documents including B / L, to remitting the bank accompanied by a written request to remitting the bank to send and collect the documents to the importer.
- Remitting banks make delivery documents (S / R) and together the documents are sent to collectors / presenting banks according to exporters’ orders, and collecting banks or presenting banks notify the arrival of this document to importers while collecting payments.
- Importers make payments to Collecting / presenting banks
- a). After receiving payments from importers, collecting or presenting banks submit documents to importers and importers can collect goods at the destination port.
b). Along with when submitting documents to importers, Collecting bank / presenting bank pays to remitting the bank
- a).Importers submit document documents (especially B / L) to agents from the shipping company for get goods
b). Payments from collecting banks / presenting banks by remitting banks are paid to exporters
- After receiving document documents from the importer, shipping the company hands over the items to the importer.
Various types of Documentary Collection:
- D/P atau Documents against payment
Exporters request remitting banks to submit documents to importers or through their banks if they have already paid, this can be done if the payment agreement is sight or show, and usually the documents sent are Sight drafts or money orders and shipping documents (B / L, Invoice, P / L, W / L etc.).
With the request of the exporter, remitting the bank makes a delivery letter sending documents called schedule of remittance (S / R) to the collectors / presenting banks, the contents of which are asking collectors / presenting banks to submit documents to importers if the importer pays.
Examples of these commands are:
“Please deliver documents against payment ” with or /
without protest.
- CAD atau Cash Against Documents
In principle, it is almost the same as documents against payment, the difference is only in the document sent, ie only Shipping documents and no drafts
This method is caused because, if the documents sent are financial documents (for example drafts), stamp duty will arise, especially in certain countries which are quite expensive. Therefore, to avoid the stamp duty, exporters choose not to include financial documents, so the collection method is born.
- D/A atau Documents against acceptance
Exporters request remitting banks to submit documents to importers after importers accept drafts (promising to pay at maturity).
This is done considering the payment agreement is with a certain period / tenor.
And orders from remitting banks to collecting / presenting banks are
“Please deliver documents against acceptance ” with or/ without protest “
- Free of Payment
Exporters request remitting banks to submit documents to importers without payment because maybe payment has been made before the goods are sent, this method is usually called Free of Payment.
And the command is:
“Please deliver documents to drawee free of payment”.
By means of this DOCUMENTARY COLLECTION, exporters feel safe because it is certain that, the importer will not be able to collect goods before making payments or acceptances.
