CHAPTER 23 - TYPES OF DOCUMENTARY COLLECTION

Types of Collection

The following are the three types of collections:

·         Clean Collections

·         Documentary Collections

·         Direct collection

Clean Collection:

·         A clean collection is a collection of financial instruments (Documents) ( Bill of Exchange, Promissory Notes etc) and NOT accompanied by Commercial documents ( invoice, packing list, bill of lading, airway bill certificate of origin, Inspection Certificate etc). 

·         Clean Collection is complete disadvantage for the Exporter or Seller.

Documentary Collection:

·         Documentary Collection involves collection of both the Commercial documents and Financial Documents.

·         The collection procedures go through the normal flow

Direct collection:

·         In Direct Collection, the Remitting Bank may give a pre -allotted reference numbers with a Bank Covering Letter of instructions to the Seller/Exporter.

·         With the reference nos and Bank Covering Letter of instructions, the Seller/Exporter forwards it directly together with the other Commercial, Shipping and Financial documents to the Collecting Bank/Presenting Bank for Payment or Acceptance.

·         Other than that, the collection procedures go through the normal flow. It carries the same power as if sent through the Remitting Bank.