CHAPTER 21 - CYCLE OF DOCUMENTARY COLLECTION

Collections - Documents against Payment (D/P):

·         Buyer and the seller enter into an agreement for supply of goods, the terms and conditions method of settlement etc.

·         Seller dispatches the good to the buyer’s bank (with the concurrence of the collecting bank.)

·         Seller’s bank forwards the documents to the buyer’s bank.

·         Buyer’s bank informs the buyer regarding receipt of documents and the terms and conditions of payment.

·         Buyer makes payment and takes delivery of the goods.

·         Buyer’s bank remits the payment to the seller or his bank.

Collections - Documents against Acceptance (D/A):

·         Buyer and the seller enter into an agreement for supply of goods, the terms and conditions methods of settlement etc.

·         Seller dispatches the goods to the buyer’s bank (with the concurrence of the collecting bank).

·         Seller’s bank forwards the documents to the buyer’s bank.

·         Buyer’s bank informs the buyer regarding receipt of documents and the terms and conditions of payment.

·         Buyer accepts the draft and takes delivery of the goods.

·         The payment for the goods will be made at a future date as per agreement between the buyer and the seller.

·         On the due date the buyer makes the payment against the documents.

·         The buyer’s bank remits the payment to the seller or his bank.

CHAPTER 20 - CYCLE OF OPEN ACCOUNT

·         The buyer and seller enter into an agreement for dispatch of goods, terms and condition and settlement / payment for the goods.

·         The seller dispatches the goods to the buyer.

·         The buyer makes payment through his bank for the goods at a future date as per the agreement.

·         The seller may continue to dispatch goods to the buyer up to an agreed overall limit.

·         The goods are consigned directly to the buyer so that the buyer could take delivery of the same.

CHAPTER 19 - CYCLE OF ADVANCE PAYMENT

·         The buyer and seller enter into an agreement for dispatch of goods, terms and conditions and settlement / payment for the goods.

·         The buyer makes payment (full or partial) through his bank for the goods even before the goods are dispatched.

·         The seller dispatches the goods only after receipt of advance payment.