Shipment
The exporter ships the goods and lodges shipping/title documents with their bank.
Trade Finance
Documentary Collection
A trade-settlement procedure in which a bank in the importer's country acts on behalf of an exporter to collect and remit payment for a shipment — a cost-effective alternative to a Letter of Credit.
What It Is
A simpler alternative to a Letter of Credit
In a Documentary Collection, an exporter's bank sends shipping and collection documents to a correspondent bank in the importer's country. That presenting bank releases the shipping and title documents to the importer in exchange for payment (documents against payment, or "DP") or a firm commitment to pay on a fixed date (documents against acceptance, or "DA").
Unlike a Letter of Credit, the banks involved act only in a fiduciary capacity to collect payment on the exporter's instructions — they do not guarantee payment or cover credit and country risk. It is a simpler, generally lower-cost mechanism, suited to trading relationships where the parties are comfortable with that balance of risk.
Who issues this instrument
Documentary Collection instruments are issued by a bank or other authorised financial institution, not by MTG. MTG is a non-bank financial company that facilitates access to these instruments and coordinates the process on the client's behalf. See the disclaimer for full detail.
Key benefits
- A cost-effective alternative to a Letter of Credit
- Manage transactions and collections in multiple currencies
- Centralised tracking of import or export collections
- Electronic notification when documents arrive
- Simplifies administration of commercial trade transactions
How It Works
The typical process.
Every transaction is different; this is the general shape of how documentary collection arrangements proceed.
Documents forwarded
The exporter's bank sends the documents to a correspondent bank in the importer's country.
Presentation to importer
The presenting bank notifies the importer and releases documents on payment (DP) or acceptance (DA).
Remittance
Once paid or accepted, proceeds are remitted back to the exporter through the banking chain.
MTG's Role
How MTG helps
MTG facilitates documentary-collection arrangements for both importers and exporters, helping simplify the administration of DP and DA collections and providing visibility into when documents arrive and when funding is due.
The banks in the collection chain handle the physical release of documents and remittance of funds; MTG's role is coordination, tracking and administrative support for the client.
- Digital onboarding and document collection
- Transaction tracking through to issuance
- Automated notifications on status and deadlines
- Intelligent document processing for supporting paperwork
Get Started
Discuss a Documentary Collection requirement.
Tell us about the transaction and we'll confirm whether this instrument fits.