Collection is an operation often used in international settlements

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

In order to find out as accurately as possible what this or that word from the business lexicon means, it is better to refer to legislative acts. In this article we will analyze the meaning of the term "collection". This concept is reflected in article number 874 of the second part of the Civil Code. According to it, during settlement operations under the collection scheme, the credit institution must, on behalf of its client and at his expense, perform a set of actions to receive from the payer under the payment agreement or accept it (the agreement to pay is implied).

Collection is an operation that is often used in international settlements. In this case, the exporter brings a collection order to the servicing bank and attaches accompanying documents to it. Note that not every financial institution provides such services. The credit institution, in turn, sends an order to the country of delivery of the goods, to the corresponding bank, which will interact with the importer. The correspondent financial institution issues trade documents to the importer, receiving fromit is a payment that is transferred to the original bank, and then to the exporter.

There are several varieties of collection - this is the so-called clean and documentary. Documentary is almost always accompanied by the transfer of commercial or trade documents. It is considered quite risky, because there is a time gap between the receipt of the final payment and the initial transfer of documents to the bank and the shipment of goods. In addition, when the package of documents arrives at the corresponding bank, the importer may not have the funds to pay, or even become bankrupt.

What schemes are used to reduce the risk of collection operations? These are the so-called transactions with a previously received guarantee from the corresponding bank. It is transferred by this credit institution to the bank that works with the exporter. And he, in turn, provides bank guarantees to the exporting company.

Clean collection is an operation when no shipping documents are transferred. Instead, financial documents (check for collection, bills of exchange, etc.) are circulated during the operation. In this case, if a person owns, for example, a check of a foreign bank, on which money can be received within a limited time, he can apply to a Russian bank to carry out the above operation. A Russian financial institution will require the client to present a passport and fill out a number of documents. After that, the check will be taken and sent by interbank mail to the issuing bank. If everything is in order with the financial document,the foreign credit institution will transfer the money to a Russian bank, which in turn will transfer it to the original holder of the check.

Also, currency can be sent to foreign banks for collection. This operation, in accordance with federal regulation No. 173 (adopted in 2003, December 10), is one of the possible transactions concluded between residents of our country. In particular, Sberbank accepts foreign money for collection in Russia.