Payment collection services benefit both buyers and sellers
First American Bank helps companies facilitate import-export transactions. A documentary collection is a mechanism in which the bank acts as a collection agent for payment between the buyer and the seller. Shipping documents are released to the buyer (including title to the imported goods) only when the seller has received payment or a draft has been accepted promising payment at a future date.
- Less costly than letters of credit.
- No bank commitment to pay, therefore doesn't utilize credit line with bank.
- Buyer is not obligated to pay for goods before shipment.
- Control of the shipping documents through bank intermediaries.
- Simple, fast and inexpensive handling compared to letters of credit.
- Often faster receipt of payment than open account terms.
- Seller retains title to the goods until payment or acceptance is made.