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In a Documentary Collections transaction, the exporter's and the importer's banks facilitate the export sale by exchanging shipping documents for payment. However, the banks do not verify that the documents are accurate and do not guarantee payment as they do with Letters of Credit.

Documentary Collection Process The seller submits a collection order to his or her bank. The seller's bank then submits the collection order to the bank of the buyer. The buyer's bank presents a “presentation document” to the buyer, who then must make a payment or acceptance to his or her bank.

The bank to which a person requiring payment of a cheque or other financial document has presented the cheque or other document for payment.

A bank remittance is a funds transfer from one bank account to another as a gift or payment. Remittances are used to pay bills or invoices and are sent via an electronic payment system, wire transfer, mail, draft, or check.

A documentary collection (D/C) is a transaction whereby the exporter entrusts the collection of payment to the exporter's bank (remitting bank), which sends documents to the importer's bank (collecting bank), along with instructions for payment.

Documentary collection is also known as Cash Against Documents (CAD) by most exporters and importers. Documentary collection is more like formal name usually used by bank professionals, whereas cash against documents is a daily life name usually used by importers and exporters.

In a Documentary Collections transaction, the exporter's and the importer's banks facilitate the export sale by exchanging shipping documents for payment. However, the banks do not verify that the documents are accurate and do not guarantee payment as they do with Letters of Credit.

Documentary collection is of two types — documents against acceptance and documents against payment.