Documents against payment collection / Documentary collection with linked document

Linked documentary collection is a safer version of documentary collection, which protects the exporter from the risk of being out of possession, and is not unfavorable for the buyer either.

One of the frequently used payment solutions in contracts for international commercial transactions is the documentary collection. There are two types of this solution in connection with the customer's credit: the linked and the open (i.e. not linked) documentary collection direct debit.

There are also several versions of the less risky linked document collection, which links the delivery of the goods to the payment: from the freight forwarder's collection through the indirect bank collection to the direct bank collection.

In the case of forwarder collection, as a seller, we deliver the goods to the address and disposal of a foreign freight forwarder with the instruction that they can only be delivered to the buyer against a bank receipt confirming payment. Here, we do not give the bank a direct debit order, the bank does not call our customer to pay, he only contacts the bank at the time of payment (he transfers the amount). However, this solution is often not secure enough - the close relationship between our customer and the foreign forwarder can lead to the loosening of the bond.

As a seller with indirect bank collection, the goods are also delivered to the address of a foreign forwarder, but at the disposal of a bank. (For practical reasons, the bank is usually a foreign operator.) We send the documents to the bank entrusted with the collection, which bank (directly or through its correspondent partner) calls our customer to pay. 

As proof of payment, the buyer receives a so-called delivery and goods release ticket from the bank, against which the buyer can collect the goods from the forwarder. (If among the documents there is a security document embodying the right of ownership over the goods - bill of lading or warehouse receipt ticket - the buyer will receive this in return for payment.)

If we have agreed on direct bank collection, as the seller, we deliver the goods to the bank 's address and availability, and send the documents. Our buyer pays at the bank 's request, after which he receives the goods and the accompanying documents. It is important to know that banks cannot be obliged to accept this solution, so you must first find out which foreign bank is willing to accept goods.