A documentary collection is the instruction of the seller to the Bank or buyer's bank to collect the value of the goods shipped to the buyer by handing over the documents which comprise title to goods against payment or an undertaking to pay.

Under Documentary Collection the Bank takes control over the documents and releases them when buyer complies with the requirements of the exporter as set out in the collection order, by the seller/seller's bank.

Payment under documentary collections can be gotten via three ways as follows:

Documents against payment:- Documents are released only against payment of the value of the documents

Documents against acceptance:- Documents are released against acceptance of a term bill. The buyer will make payment of his acceptance when it falls due.

Documents against Acceptance Under Avalisation:- Documents are released to buyer against acceptance and the buyer's bank undertakes to make payment on the due date.