How does documentary payment work?
Documentary payments provide greater certainty for your international transactions. You know in advance where, when, in which currency and how payment will be made. Below we explain the available solutions and how they work.
Types of documentary payments
Documentary Collection
In a Documentary Collection the bank acts as an intermediary. As a supplier, you provide us with the necessary commercial documents. These documents, including the collection instructions, are ultimately intended for your customer. These instructions specify how, when and in which currency payment is to be effected.. We then forward all documents to the customer's bank with the instruction to release them to the customer only after the collection instructions have been followed and all conditions have been met. Only then the customer receives the trade documents.
There are several types of Documentary Collections. What type is the best solution for you depends on the wishes and possibilities of the trading partners and may differ per transaction.
A Documentary Collection is a means of payment, but does not guarantee payment by the customer. As a result the risk of non payment remains with you. A Letter of Credit eliminates this risk.
There are several types of Documentary Collections. What type is the best solution for you depends on the wishes and possibilities of the trading partners and may differ per transaction.
A Documentary Collection is a means of payment, but does not guarantee payment by the customer. As a result the risk of non payment remains with you. A Letter of Credit eliminates this risk.
Letter of Credit (L/C)
A Letter of Credit (L/C) is a means of payment that eliminates the risk of non‑payment by the customer provided documents comply with the L/C terms
As a supplier, you come to a (contractual) agreement onthe terms of the L/C transaction with your customer. The customer then instructs their bank to open a Letter of Credit in your favour. The L/C is then forwarded to your bank, which checks the L/C terms and provides you with the L/C text.
Once you have received and reviewed the L/C and everything is as agreed, you can produce and prepare the goods for shipment. You then draw up the prescribed documents and submit them to ABN AMRO. We examine the documents, we follow the payment terms and forward the documents to the customer’s bank.
If all documents comply with the terms of the L/Cnt, the customer receives the documents. Payment will take place according to the L/C terms and conditions.
Bank Guarantee
A Bank Guarantee is not a payment method, but a form of security that provides your business partner with certainty of payment if you unexpectedly fail to meet your obligations.
There are various types of Bank Guarantees. The most appropriate option depends on the transaction type and the level of security required.
Your business partner may request a Bank Guarantee to ensure that you will meet your obligations. You ask us to issue the Bank Guarantee, and for the duration of the guarantee we block the guaranteed amount on your account.
If you fail to meet your obligations, your business partner can call upon the Bank Guarantee. We will handle the claim (written request) financially on your behalf and subsequently settle the claimed amount with you.
Documentary Collection
In a Documentary Collection the bank acts as an intermediary. As a supplier, you provide us with the necessary commercial documents. These documents, including the collection instructions, are ultimately intended for your customer. These instructions specify how, when and in which currency payment is to be effected.. We then forward all documents to the customer's bank with the instruction to release them to the customer only after the collection instructions have been followed and all conditions have been met. Only then the customer receives the trade documents.
There are several types of Documentary Collections. What type is the best solution for you depends on the wishes and possibilities of the trading partners and may differ per transaction.
A Documentary Collection is a means of payment, but does not guarantee payment by the customer. As a result the risk of non payment remains with you. A Letter of Credit eliminates this risk.
There are several types of Documentary Collections. What type is the best solution for you depends on the wishes and possibilities of the trading partners and may differ per transaction.
A Documentary Collection is a means of payment, but does not guarantee payment by the customer. As a result the risk of non payment remains with you. A Letter of Credit eliminates this risk.
Letter of Credit (L/C)
A Letter of Credit (L/C) is a means of payment that eliminates the risk of non‑payment by the customer provided documents comply with the L/C terms
As a supplier, you come to a (contractual) agreement onthe terms of the L/C transaction with your customer. The customer then instructs their bank to open a Letter of Credit in your favour. The L/C is then forwarded to your bank, which checks the L/C terms and provides you with the L/C text.
Once you have received and reviewed the L/C and everything is as agreed, you can produce and prepare the goods for shipment. You then draw up the prescribed documents and submit them to ABN AMRO. We examine the documents, we follow the payment terms and forward the documents to the customer’s bank.
If all documents comply with the terms of the L/Cnt, the customer receives the documents. Payment will take place according to the L/C terms and conditions.
Bank Guarantee
A Bank Guarantee is not a payment method, but a form of security that provides your business partner with certainty of payment if you unexpectedly fail to meet your obligations.
There are various types of Bank Guarantees. The most appropriate option depends on the transaction type and the level of security required.
Your business partner may request a Bank Guarantee to ensure that you will meet your obligations. You ask us to issue the Bank Guarantee, and for the duration of the guarantee we block the guaranteed amount on your account.
If you fail to meet your obligations, your business partner can call upon the Bank Guarantee. We will handle the claim (written request) financially on your behalf and subsequently settle the claimed amount with you.
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