An Export Documentary Collection is a settlement mode where CEXIM, acting as the remitting bank of the exporter (our customer), collects proceeds from the importer through a foreign collecting bank upon presentation of the exporter's commercial and financial documents.
1. The Export Documentary Collection can be divided into documents against payment (D/P) and documents against acceptance (D/A);
2. According to the exporter’s request, we could offer finance service such as export bill advance, credit under short-term export insurance and etc.
Benefits for Exporters
Low Cost: Lower bank charges enable the exporter to save their cost;
Simple Steps: Compared with documentary credit, the export collection is simple and easy to use;
Securing the Collection of Proceeds: The importer cannot take delivery of the goods until making acceptance or payment, which reduces the risks for the exporter as compared with open account.
When Do You Choose Export Documentary Collections?
The exporter has a knowledge of the importer’s credit standing but cannot bear the risk of open account;
If the exported commodity is in a seller’s market, then D/P can be used;
If the exported commodity is in a buyer’s market where the importer with a high creditworthiness requires a deferred payment, then D/A can be used.
Under documentary collections, the bank usually does not examine the documents except checking the number of documents according to the schedule of instructions; furthermore, the bank is not responsible for a timely collection of proceeds, which totally depends on the importer’s credit standing;
Please prepare the following documents when applying for export documentary collection: collection instruction form, a full set of documents and etc;
Please clarify your choice between D/P and D/A in your collection form, or we will handle the collection as D/P;
Please submit a written application with authorized stamp if you want to decrease the bill amount, extend the payment time or amend the presentation requirements;
Please try to avoid the use of D/A. If it is inevitable, in order to mitigate the risks, we suggest you use D/A with other instruments such as bank guarantee, export credit insurance or factoring;
Under D/A, you have actually extended the importer’s payment time, so we suggest you take into account the interest-related costs when determining price.