Subject: International Payment

Lecturer: Tran Minh Tu

Class: A05E
Group: 4
 GROUP 4

NGUYỄN MAI HOÀNG THY NGUYỄN NGỌC HỒNG PHÚC

NGUYỄN TRÀ GIANG PHAN TRIỆU VY

VŨ THỊ PHƯƠNG VY TRƯƠNG THỊ NGỌC CHÂU

 Introduction

THE COLLECTION METHOD IN

INTERNATIONAL PAYMENT AND
SOLUTIONS TO REDUCE RISKS OF
EXPORTER AND IMPORTER
CONTENT

I. Introduction
II.Theoretical Basics
III.Risks/Case Study
IV.Solutions/Conclusion
 THEORETICAL BASICS

WHAT IS COLLECTION METHOD?

 THEORETICAL BASICS

DEFINITION

Collection payment method is a payment method in which the exporter, after

fulfilling the obligation to deliver goods or provide services, entrusts his serving
bank to collect money from the importer based on the on the basis of drafts (or
cheques) and documents presented by the exporter.
 THEORETICAL BASICS

THE PARTIES TO A COLLECTION METHOD

• The Principal (Seller/Exporter/Drawer)

• Remitting Bank (Exporter’s bank)
• The Collecting or Presenting (Buyer's) Bank
• Drawee (Buyer/Importer)
 THEORETICAL BASICS

TYPES OF COLLECTION METHOD

Clean Collection Documentary Collection

 THEORETICAL BASICS

CLEAN COLLECTION

The clean collection is a payment method by when the seller request the
bank to collect the money of the bill of exchange from the buyer. The
collection documents only include financial documents (B/E, Cheque),
commercial documents (Commercial invoice, packing list, transport
documents) are sent directly to the importer.
 THEORETICAL BASICS

THE PROCESS OF CLEAN COLLECTION

Principal (1) Drawee

(Exporter) (Importer)
(2)
(8) (5)

(3) (6)

(7)
Remitting bank Collecting bank
(4)
 THEORETICAL BASICS

DOCUMENTARY COLLECTION

Documentary collection is a method of payment between the seller (exporter)

and the buyer (importer) by the seller will entrust the bank to collect the money
of the buyer. Not only based on the bill of exchange, but also on the set of goods
documents, enclosed with the condition that the importer pays or accepts the
term draft, the new bank will hand over the goods documents to go get the goods
 THEORETICAL BASICS

The set of documents sent for collection includes:

•Commercial documents together with financial documents
•Or only commercial documents (no financial documents)
 THEORETICAL BASICS

THREE TYPES OF COLLECTION METHOD

• Documents against Payment (D/P)
D/P condition is a condition of payment to be paid at the time of presentation (payable at sight). The
collecting bank only awards the commercial documents when the importer pays for collection.
• Documents against Acceptance (D/A)
This method allows the buyer to sign a bill of exchange, which is held by the bank until the maturity date of
the draft. In this method of payment, the buyer does not have to pay immediately, but on the maturity date of
the bill of exchange, the buyer must make the payment as agreed.
• D/OT (Documents against Other terms)
A part of the proceeds is paid immediately, the remainder is paid under the D/A terms:
- Hand over with the promissory notes.
- Hand over with letters of undertaking to pay.
- Release documents against acceptance pour aval.
 THEORETICAL BASICS

THE PROCESS OF DOCUMENTARY COLLECTION

Risks

CLEAN COLLECTION
To the Exporter
• The Importer, who intentionally
commits fraud, still receives the
goods, but refuses to pay or accepts
the payment.
• If the Collecting Bank fails to
execute the Collection Order, the
consequences will be borne by the
Exporter.
Risks
To the Importer
• The Exporter does not deliver the
goods with the right quality, type…
as agreed in the Commercial
Contract.
• When the Collection Order comes
before the goods, the Importer must
fulfill the payment obligations.

DOCUMENTARY COLLECTION
To the Exporter
• If the Importer has a bankruptcy or
the financial capacity is weak, the
payment will be delayed or they can
not receive the goods.
• When the Importer fails to accept the
goods, the Exporter has to pay
additional storage charge as well as
the risks of goods explosion.
Risks
To the Importer
• The Importer must bear the risk of
fraud by the Exporter when he
provided incorrect or falsified
documents.
• After signing or accepting payment
of the Usance Bill of Exchange, the
Importer can be sued by the Exporter
if he fails to pay on time.
 Case
CASE STUDY ABOUT RISKS IN
COLLECTION METHOD

Constituted a contract of
international sale of goods

RED’S COMPANY BLUE’S COMPANY

(EXPORTER) (IMPORTER)
 Case

Two parties have a good relationship.

 They chose the D/A form of the
documentary collection as a
method of payment in this time.
 Case

Presented the Usance B/E to ask for

payment

Gave the set of documents

BANORTE BANK
BLUE’S COMPANY
(COLLECTING BANK)
(IMPORTER)
Case
 Case
CASE STUDY ABOUT RISKS IN
COLLECTION METHOD

Sent the goods and commercial

documents directly

YELLOW’S COMPANY
GREEN’S COMPANY
(EXPORTER)
(IMPORTER)
 Case

Sent an Prepared and

Sent a
application for sent a collection
collection
collection along order and
order to ask
with financial financial
for payment
documents documents

YELLOW’S
VIETCOMBANK XINGXINGBANK GREEN’S COMPANY
COMPANY
(REMITTING BANK) (COLLECTING BANK) (IMPORTER)
(EXPORTER)
Case
Solutions
 Solutions

DOCUMENTARY COLLECTION

• The Exporter should find a reputable Bank as well as be sure of the content of
the documents.
• The Bank just releases documents to the Importer when charges have collected
only.
• The Importer need to fulfill his commitments with his Bank when doing the
payment obligations.
 Solutions

CLEAN COLLECTION

• Both parties have high trust toward each other, specially both should have
worked before.
• The goods are not too valuable or the transaction amount is not too significant
to avoid damaged goods as well as money loss.
 Conclusion

Therefore, import-export enterprises need to

be careful when choosing reliable partners like
who have long-term or both sides have internal
relations as the parent company and its
subsidiary or between different affiliates to
reduce risks in international transactions.
 SOURCE

• 1. funnyfood.vn, “Phương Thức Thanh Toán Nhờ Thu (Documentary

Collection)”,
http://funnyfood.vn/vn/Blog/Kien-thuc-Xuat-Nhap-khau/Phuong-thuc-than
h-toan-nho-thu.aspx
• 2. haiphonglogistics.com, “Phương Thức Thanh Toán Nhờ Thu”,
https://haiphonglogistics.com/phuong-thuc-thanh-toan-nho-thu/
• 3. kynangxuatnhapkhau.vn, “Phương Thức Thanh Toán Nhờ Thu “,
https://kynangxuatnhapkhau.vn/phuong-thuc-thanh-toan-nho-thu/
• 4. melodylogistics.com, “Các Phương Thức Thanh Toán Quốc Tế Trong
Xuất Nhập Khẩu”,
https://www.melodylogistics.com/cac-phuong-thuc-thanh-toan-quoc-te-tron
g-xuat-nhap-khau-509.html
THANKS FOR WATCHING!