In international trade, the seller may feel sufficiently comfortable to ship goods to the buyer prior to receiving full payment. However, simply handing over the shipping documents to the buyer would greatly increase the risk to the seller. It effectively grantsthe buyer access to the goods, and the fate of receiving payment is left completely on the hands of the buyer. In cases like this, both the buyer and seller may decide to use Documentary Collections to let their respective banks facilitate the exchange of shipping documents with the buyer’s payment or commitment to pay.Whether you are a buyer or a seller, CAB can assist you in dealing with your counter party’s bank in carrying out this kind of transaction.

• Can be either Documents against Payment (D/P) where the buyer effects payment upon receipt of the shipping documents, or Documents against Acceptance (D/A) where the buyer makes a commitment to pay at a specified future date upon receipt of the shipping documents
• Increases the likelihood of payment for the seller, as the buyer is unable to obtain the goods without effecting payment or at least signifying commitment to pay at his bank
• Provides some assurance to the buyer that the shipment will arrive

In international trade, it may happen that the seller is unwilling to proceed with shipment without any assurance of payment. At the same time, the buyer is also unwilling to initiate any payment without any assurance of shipment. In cases like this, both parties may decide to pursue the sale through the use of a Letter of Credit. An LC, issued by the buyer’s bank, is an irrevocable undertaking by that bank to honor a presentation by the seller’s bank of documents submitted in accordance with the terms and conditions specified in the LC. For buyers, CAB can facilitate the issuance of an LC to your counter party. For sellers, CAB can facilitate the receipt and transmission of shipping documents.

• Allows buyers to impose documentary specifications that meet their requirements
• Allows buyers to more tightly control the timing of shipments and presentation of documents through the terms of the LC
• Payment to the seller is guaranteed by the buyer’s bank provided that the terms of the LC are met
• Enables seller to receive guarantee of payment prior to shipment of goods