Documentary remittance is a payment issued to the exporting company in exchange for the submission of commercial documents proving the shipment of the goods.

To complete the transaction, the exporter or his bank sends the documents to the bank of the importer with instructions to deliver them to his client against payment or acceptance due.

Advantage:

The documentary collection is simpler, faster and less expensive than the documentary credit.

Namely:  

·         Banks only operate as agents and are not committed to pay. The insolvency risk remains possible.

·         Product limitation lies in the fact that the importer has no obligation to take the documents and pay the exporter. The goods can remain immobilized and can lead to negotiations to lower the price by the importer.

·         Attention, it is not impossible that the buyer can withdraw the goods without documents!

Recommandations:

• To have a real safety regulation in case of surrender document against acceptance, i.e. against acceptance of a draft and guarantee the payment at maturity of trafficking, you can request it to be endorsed by the presenting bank.
• Only shipments by sea provide a guarantee of payment as part of this process to the extent that the t ter transport (Bill of lading) is a document of title to the goods: it must be presented for taking delivery of the goods.
• Use with caution preferably when the buyer is solvent and that the exporter has with his trusted business relations and the country of the buyer has good economic and political stability.