Collection
Collection is a bank's settlement transaction under which the bank on behalf of its client (exporter) receives on the basis of instructions given by the client (exporter) funds from the payer (importer).
Collections are governed by the Un³form Rules for Collect³ons, ICC 522.
Collections may be either documentary or clean.
Documentary collection is a collection of financial documents accompanied by commercial documents (bills, transportation and insurance documentation) and also collection solely of commercial documentation.
Clean collection is a collection of financial documentation (bills of exchange, cheques and other documentation used for repayments) when it is not accompanied by commercial documentation.
Advantages for clients
Collection is a tool that enables an exporter in one country to receive payment from importer in another country. By documentary collection the exporter can possess control over goods if there is a bill of lading until importer repays for the commodity or accepts a bill of exchange.