Benefits
The collecting bank, usually domiciled in the importer's country, is able to seek payment from the importer in a more effective way than can the exporter from his own country. In addition, collections offer more security than open account transactions, and documents against payment offer more security than documents against acceptance.
Documents Against Payment (D/P)
The exporter instructs the remitting bank to ensure that the shipping documents are sent to the collecting bank with instructions that they are to be released to the importer only against payment of the bill of exchange.
Documents Against Acceptance (D/A)
The exporter instructs the remitting bank to ensure that the shipping documents are sent to the collecting bank with instructions that they are to be released to the importer only against acceptance of the usance bill of exchange. Payment is then collected on maturity of the bill of exchange.
Documents Against Acceptance "Pour Aval"
The exporter instructs the remitting bank to ensure that the shipping documents are sent to the collecting bank with instructions that they are to be released to the importer only against acceptance and the collecting bank's "avalisation" added to the bill of exchange.
Avalisation, therefore, constitutes an unconditional guarantee of payment from the avalising bank. |
