Documentary Collections FAQ

When a drawee acknowledges in writing on the face of the draft that the buyer will pay the draft at maturity. (See also Draft, Drawee.)

A term used in the body of drafts/bills of exchange indicating that payment is due upon presentation or demand.

Non-negotiable bill of lading that applies to air cargo. It serves as the shipper's receipt, and shows that the carrier has accepted the itemized goods and is responsible for getting the merchandise to the destined airport. (See also Bill of Lading.) shipper's receipt, and shows that the carrier has accepted the itemized goods and is responsible for getting the merchandise to the destined airport. (See also Bill of Lading.) shipper 's receipt, and shows that the carrier has accepted the itemized goods and is responsible for getting the merchandise to the destined airport. (See also Bill of Lading.)

Guarantee added by a bank to an accepted time draft by endorsing the front of the draft "per aval." The avalizing bank becomes obligated to pay the draft at maturity if the drawee/acceptor fails to do so.

There are many different terms of sale or payment, ranging from prepayment of cash to permitting the customer considerable time within which to pay for the goods after received.

The process of prompting for and obtaining payment of a debt or other outstanding obligation. Collection actions to secure payment of a past due balance. (See also Documentary Collection.)

Document signed by a transportation company ("carrier") to show receipt of goods for transportation from and to the points indicated.

The presentation of documents, through banking channels, relating to the shipment of goods from an exporter (seller) for payment or acceptance by an importer (buyer). (See also Collections.)

Document which shows the terms of a sale. Includes a full description of the goods, sale price, charges, and discounts.

Open account, no draft drawn. Transaction is payable when specified.

Typically, a commercial invoice, bill of lading, insurance certificate, and consular invoice. insurance certificate, and consular invoice. insurance certificate, and consular invoice.

A negotiable instrument that calls for payment of money. The drawer (or seller) orders in writing for the drawee (or buyer) to pay a specific amount of money to the drawer on a certain date. Also called a bill of exchange. bill of exchange. bill of exchange.

The person, company, or bank upon which a draft is drawn.

Individuals involved in a sales transaction. In domestic sales: seller and buyer. In international sales: exporter and importer. In shipping: shipper and consignee. In letters of credit: beneficiary (seller) and applicant (buyer). consignee. In letters of credit: beneficiary (seller) and applicant (buyer). consignee. In letters of credit: beneficiary (seller) and applicant (buyer).

Any bank other than the remitting bank involved in the collection of a draft and/or documents.

The person or company that sells or arranges to transport goods out of a country.

In a draft collection transaction, the bank that contacts the drawee, generally the buyer of goods, for acceptance and/or payment.

Party entrusting a draft and/or documents to a bank for collection of payment, generally the seller of goods.

A medium of exchange; coined or stamped currency.

Any company that may transport goods for payment, such as an ocean vessel, aircraft, truck, train, or courier service.

Quality belonging to a document to transfer ownership of money, goods, or other items of value specified in the document by endorsement and/or delivery of the document.

Resolving conflicts in a court of law.

A customer's written instructions as to the handling of a collection, including how to deliver documents, protest instructions, cable advices, and payment. protest instructions, cable advices, and payment. protest instructions, cable advices, and payment.

The International Chamber of Commerce. Publishes rules governing the preparation and usage of letters of credit. (See also UCP 500.) UCP 500.) UCP 500.)

The person, company, or bank that creates the draft and receives payment.

The beneficiary delivers the documents to the advising bank to negotiate on the seller's behalf. advising bank to negotiate on the seller's behalf. advising bank to negotiate on the seller's behalf.

A document certifying the country of origin of specified goods.

National government authorities that control imports, inspect imports, and collect duties levied on both imports and exports

Financial and commercial documents such as drafts, commercial invoices, packing lists, bills of lading, insurance certificates, etc. In Letter of Credit transactions, banks deal with documents alone and are not involved in underlying sales agreements. commercial documents such as drafts, commercial invoices, packing lists, bills of lading, insurance certificates, etc. In Letter of Credit transactions, banks deal with documents alone and are not involved in underlying sales agreements. commercial documents such as drafts, commercial invoices, packing lists, bills of lading, insurance certificates, etc. In Letter of Credit transactions, banks deal with documents alone and are not involved in underlying sales agreements.

The bank named in the letter of credit to make payment to the seller or the negotiating bank upon presentation of the proper documentation. letter of credit to make payment to the seller or the negotiating bank upon presentation of the proper documentation. negotiating bank upon presentation of the proper documentation.

Legal arrangement under which a seller of goods delivers these goods "on consignment" into someone's custody but ownership remains with the seller until he is paid.

In a draft collection transaction, the first bank in the chain of collection, i.e., the principals or sellers bank.

Risk incurred by a seller of goods that a buyer in a different country will not be able to pay for the goods due to political or economic conditions in his country. The two components of country risk are "political risk" and "transfer risk." political risk" and "transfer risk." "political risk" and "transfer risk."

Negotiation of a draft, or other negotiable instrument, or letter of credit documents without the normal warranty on the part of the seller of the instrument/documents that the obligor named in the instrument (the "drawee," "payor," or "maker") will pay. n of a draft, or other negotiable instrument, or letter of credit documents without the normal warranty on the part of the seller of the instrument/documents that the obligor named in the instrument (the "drawee," "payor," or "maker") will pay.

To assume liability for the debts or obligations of another in the event of a default.

A document issued by an insurance company covering a particular shipment of merchandise.

(See Draft.)

The party (generally buyer/importer) for whose account a letter of credit is established.

The person or company due payment in the letter of credit. Usually the exporter (seller).

An individual or company to whom cargo is shipped or consigned.

A certificate of dishonor (notarized by a Notary Public) of the non-payment or non-acceptance of a draft.

Uniform Customs and Practices for Documentary Credit of the International Chamber of Commerce, Publication 500. These are rules for managing letters of credit.

The bank that receives a letter of credit issued by the applicant 's bank (the issuing bank) and forwards it to the beneficiary without assuming any responsibility or liability other than to verify the authenticity of the letter of credit.

Documents, such as commercial invoices, certificates of origin, packing lists, bills of lading, etc., usually covering a merchandise transaction.

A financing instrument issued by a bank in favor of an exporter that substitutes the bank's creditworthiness for that of the importer.

After the seller presents the required documents to this bank for review, it will notify the issuing bank that terms of letter of credit have been met.

Risk in a sale of goods that the government in the buyers country may take some action that prevents the buyer from paying.

Risk incurred by the seller of goods that, due to the fact that his country has a negative balance of payments, no foreign exchange (US dollars or other "hard" currency) may be available to the buyer when he is ready to pay for the goods.

The transfer of a negotiable instrument in such form that the transferee becomes a holder.

A financing instrument issued by a bank in favor of an exporter that substitutes the bank's creditworthiness for that of the importer.

After the seller presents the required documents to this bank for review, it will notify the issuing bank that terms of letter of credit have been met.

Failure or refusal by the drawee to accept a draft presented for acceptance or to pay a draft presented for payment.

(See Letter of Credit.)

Also known as the opening bank. It issues its commitment to the seller in the form of a letter of credit. opening bank. It issues its commitment to the seller in the form of a letter of credit.

Trading in or exchange of foreign currencies in relation to one another, which permits the exchange of commodities between countries.

The party to which the rights under a transferable letter of credit are transferred.

The privilege of buying goods, services or borrowing money in return for a promise of future payment.

A right to the payment of money such as agency notes, commercial paper, T-Bills, certificates of deposit (CD's), banker's acceptances and repurchase agreements.

An agreement between two or more persons usually opposing parties in a law suit, to settle the matters in a controversy without further result to hostile litigation;

Writing one's name upon paper for the purpose of transferring the title.

An agent for the sale of merchandise who may hold possession of the goods in its own name or in the name of its principal.

A claim against a customer for services rendered or goods sold on credit.

Indemnity given by the beneficiary of a letter of credit to the negotiating bank to induce payment despite any discrepancies that may exist in the documents.