Payment For CollectionPayment for collection is a widely used method of payment in international business practice; under this method of payment the Seller's Bank transfers documents through the Buyer's Bank on the seller’s request. The transfer of documents is performed at the moment of the payment being executed by the Buyer’s Bank or at the moment of acceptance of the drafts. A letter of collection is a payment document that serves as grounds for the write-off of money from the payers’ accounts in an undisputable order. Application of letters of collection:
The documentary payment for collection in case of import of goods (works, services) is less reliable for the foreign counteragent than the settlements using letters of credit, because in case of payment for collection the bank does not undertake payment obligations. As a rule, payment for collection is used in case of trust relations between the trade partners or in case of payment of insignificant sums of money. Main advantages of payment for collection as compared with other forms of settlement:
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