Collection is negotiated as a payment method in case when the seller and buyer know each other and when the seller (exporter) is confident that the buyer is a reliable person and that there is no doubt in buyer's solvency and readiness to pay for the ordered goods.
When entering into a contract, the Buyer and Seller will specify the method of payment for the goods/services:
After being collected based on the underlying contract, the shipping documents serve as a proof of goods delivery and will also be used by the exporter to collect payment. Since the contract stipulates that the goods will be paid via documentary collection, the exporter will start the procedure. The entire process of documentary collection could be divided into three following phases:
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