Documentary collections are usually chosen as a method of payment in international trade when mutual trust and reliability exist between the counterparties. They bear the following advantages:
Transaction mechanism
The bank receives or sends documents on a collection basis based on the collection instruction provided. Under a documentary collection a bank shall only transmit the instructions receives. A bank assumes no liability or responsibility should the instructions they transmit not be carried out. Sending or receiving documents under a documentary collection banks must determine that the documents received appear to be as listed in the collection instruction and have no further obligation in that respect the parties to the transaction shall be reviewed by Citi for workability and compliance / regulatory requirements. The applicable International rules are:
Uniform Rules for Collections - ICC publication 522