Documentary Draft Collection

From Open Risk Manual

Definition

Documentary Draft Collection. It is the process for collecting payment in a sale of products where a legal demand for payment from the buyer is made by a financial institution acting as a collecting agent for the vendor. Demand is made by presenting a draft.

The collecting financial institution is also entrusted with documents to deliver in accordance with accompanying instructions, normally, once the draft is either paid or accepted. These documents are generally needed by the buyer to show title to the products before they are released by a freight forwarder and customs.

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