Detailed explanation of collection payment process: clean bill and documentary collection

According to the definition of collection in Article 2 of the “Uniform Rules for Collection” (also known as “URC522”) revised and unanimously adopted by the International Chamber of Commerce in 1995: “Collection refers to a bank that receives a collection instruction. Process financial or commercial documents in accordance with instructions received to “In short, collection is the act of issuing a bill of exchange, together with the shipping documents, to the debtor ( A payment method used by the importer to collect payment for goods. Collection is usually done through a bank, so it is also called bank collection.

Clear ticket collection process

Clear bill collection is the collection business of financial documents without any commercial documents that banks entrusted by customers. Applicable transactions include but are not limited to:

• Small payments under trade and non-trade items.
• Foreign currency cash (including residual currency) that cannot be exchanged domestically.
• Collection business of foreign exchange checks, promissory notes, and foreign bonds, certificates of deposit and other valuable documents.
• Transactions where it is impossible or inconvenient to provide commercial documents, such as high-tech product transactions such as sending samples and software, seasonal commodity transactions, and intangible trade such as service and technology transfer.

Documentary delivery conditions and business processes for documentary collection

According to “URC522”, the modes of presentation for documentary collection include document against payment, document against acceptance and document against other conditions.

D/P

The characteristic of D/P is that payment is made first and then the document is delivered. Before payment, the exporter still has control over the goods, so the exporter’s risk is smaller. According to the different payment terms of the collection bill, the document of payment is divided into two types: the document of payment at sight and the document of future payment.

• Document against payment at sight: This means that the importer must pay immediately before obtaining the documents.
• D.U.D.: The importer must pay the amount on the agreed date before he can obtain the document.

D&A

Document of Acceptance refers to a collection method in which the entrusted collecting bank hands over the shipping documents to the importer after the importer accepts the bill of exchange according to the collection instructions, and the importer fulfills the payment obligation when the bill of exchange expires. . It is suitable for the collection of usance bills. Since the exporter loses control of the documents after the importer accepts the bill, the exporter bears greater risks, and the longer the acceptance period, the greater the risk. In actual cross-border payment business, the use of D&A should be avoided or strictly controlled. When D&A has to be used (such as when promoting unsaleable products or products with poor competitiveness), the acceptance period should be shortened as much as possible. .