Documentary Collections

Documentary Collections

Documentary Collections (DCs)

Documentary Collection (DC) occurs when a seller instructs his bank to forward documents related to the exporting of goods or services to the buyer’s bank, then requesting to present these documents to the buyer for their payment. The contract will also include the conditions under which conditions the documents can released to the buyer.

What are Documentary Collections?

Documentary collections differ from a Letter of Credit (read our blog post on the differences between DCs and LCs).

In the case of a documentary collection, the exporter will request payment by presenting its shipping and collection documents to their remitting bank. The remitting bank then forwards these documents on to the bank of the importer. The importers bank will then pay the exporters bank, which will credit those funds to the exporter.

The role of banks in a documentary collection is limited, they do not verify the documents, take risks, nor do they guarantee payment; banks just control the flow of the documents.
With documentary collections, the bank does not cover credit and country risk, however, they are more convenient and more cost-effective than Letters of Credit and can be useful if the exporter and importer have a good relationship, and if the importer is situated in a politically and economically stable market.

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About the Author

Deepesh Patel is Editorial Director at Trade Finance Global (TFG). In this role, Deepesh leads efforts in developing TFG’s brand, relationships and strategic direction in key markets, including the UK, US, Singapore, Dubai and Hong Kong.

Deepesh regularly chairs and speaks at international industry events with the WTO, BCR, Excred, TXF, The Economist and Reuters, as well as industry associations including ICC, FCI, ITFA and BAFT.

Deepesh is the host of the ‘Trade Finance Talks’ podcast and ‘Trade Finance Talks TV’. He is co-author of ‘Blockchain for Trade: A Reality Check’ with the ICC and the WTO, alongside other industry research.

In addition to his work at TFG, Deepesh is a Strategic Advisor for WOA, and works closely with ITFA. He also sits on the Fintech Working Group of the Standardised Trust.

Prior to TFG, Deepesh worked at Travelex where he was responsible for the cards business and the Travelex Money app in Europe, NAM, UK and Brazil. Deepesh is Chair of Governors and co-opted LA Governor of the Wyvern Federation, which has responsibility for 5 primary schools in South London.

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