Collection means transfer of documents by banks in accordance with exporter instructions in order to receive payment.
Documents are released by the bank to importer against payment or acceptance of the draft. The use of such settlement method as collection is often caused by the peculiarities of local legislation in some countries. The use of documentary collection for settlements provides higher level of protection to the importer, since it does not make a collection payment until it receives documents or accepts a draft.
Exporters can use this settlement method provided they are confident in the willingness and readiness of their buyers to pay for the delivered goods, but at the same time consider it necessary to maintain control over the goods until the moment of payment or acceptance of the draft.