Classification and application of collection in cross-border e-commerce

In international trade, collection is a common payment method, which is mainly divided into two forms: clean collection and documentary collection.

Clear ticket collection

Clean Collection refers to a collection method that only relies on financial documents without commercial documents. Since there are no commercial bills in the clean bill collection business, it does not involve the transfer or processing of goods, and the bank only pays according to the payment terms of the bill. This method is generally used to collect small settlements such as the balance under the letter of credit, advance fees, commissions, and sample fees.

Documentary collection

Documentary collection (Documentary Collection) refers to the collection method with commercial documents (such as invoices, bills of lading and similar shipping documents) attached. In documentary collection, in addition to issuing a bill of exchange with the importer as the payee, the exporter also needs to entrust the bank with relevant commercial documents to collect the payment. Documentary collection is based on different conditions for delivering shipping documents to the importer, and can be further divided into two types: Documents against Payment (D/P) and Documents against Acceptance (D/A).

D/P

Document against payment (D/P) means that when the exporter entrusts the bank to collect payment from the importer, he instructs the bank to deliver the shipping documents to the importer only after the importer pays the payment. The D/P method is safer for the exporter. The importer cannot obtain the shipping documents without paying. Even if the importer defaults and refuses to pay, the exporter can still control the goods.

D.P. at sight

D/P at sight means that the exporter issues a sight draft together with commercial documents after delivering the goods and presents it to the importer through the bank. The importer pays immediately after seeing the draft and pays the price in full. Then go to the bank to collect the commercial documents.

D.P. Usance

D/P after sight means that the exporter issues a usance draft together with commercial documents after delivering the goods, and prompts the importer through the bank. The importer will accept the draft after verification and it is correct. The commercial documents will be collected after the payment is paid in full on the due date of the bill of exchange.

D&A

Document against acceptance (D/A) means that the exporter issues a usance draft and attaches the shipping documents, prompts the importer through the bank, and the importer accepts the bill after verifying that it is correct, and obtains the shipping documents from the bank to pick up the goods. , and then pay the payment on the due date of the bill of exchange. Document against acceptance is a kind of financial accommodation provided by the exporter to the importer, but there is a greater risk of foreign exchange collection for the exporter.