Chapter 3
Bills for collection
When there is a level of trust between buyer and seller, the seller may be
prepared to agree to a method of payment which is considerably less
expensive than documentary credits. The method is entitled bill for
collection and is used throughout the world, probably accounting for the
majority of all foreign settlements. It is fundamentally simple in operation
and allows the exporter to ship his goods, obtain a bill of lading and collect
payment by way of a bill of exchange through the use of his own bank and
a bank in the importer’s country.
Parties to a collection
Exporter (drawer)
Remitting bank
Collecting bank
Importer (drawee)
Avalising bank (exceptionally)
There are two types of bills for collection, D/P and D/A. Those terms
determine what the importer is required to do in order to obtain release of
the documents and take delivery of the goods.
D/P bill for collection (documents
against payment)
This is a sight collection where the bill of exchange is drawn payable upon
presentation to the drawee. Upon payment, the documents of title to the

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