This service is granted to inland importers. It consists of an agreement whereby the goods are shipped and the relevant bills of invoice is sent to the source bank with detailed collection instructions that are presented to the importers by the bank correspondent in the importer’s country. Often the importer’s possession of the goods depends on the payment of the amount or the acceptance of the invoice enclosed with the documents unless the shipping has taken place directly in the name of the importer.
Features of the Service
- Collection bills are an easy, uncomplicated and cheap mechanism.
- Possession and ownership of the goods depend on the payment of the amount or acceptance of the invoice which is the subject of the goods. The goods will not be transferred unless the value of goods is paid to the bank in line with the collection instructions coming to it. If no payment or acceptance, the bank – if authorized and if authorization is accepted – will withdraw the goods, store and secure them and re-ship them to the source
- Dealing with the collection system may provide the source with finance (pre- and post-shipping).
Features of Collection Bills System
- Usually for the benefit of the importer since it is deferred payment.
- Less cost and does not need prior credit from the bank.
- In case of incoming collection bills (import) the customer will be notified by the branch about the incoming bills, the method of payment of the value of the bills. If the customer accepts the bills, the value is paid to the source according to instructions of the bank that has sent the bills.
- In case the customer wishes to export, the customer ships the goods and then submits the bills to the bank, In its turn, the bank sends the bills to the importer’s bank abroad for the collection of the value of the goods in accordance with the terms and conditions specified by the customer.