*The sale is made when the buyer and seller agree on the amount to be paid, the shipping details,
and that the transaction will be a documentary collection. Then, the exporter delivers the goods
to the port or location where the merchandise will be exported from, which is usually through
a freight forwarder.
*The documents are prepared and sent to the exporter's bank, which is also known as the remitting bank.
The exporter's bank then forwards the documents to the importer’s bank, which is known as the collecting bank.
*The importer's or buyer's bank receives the documents and notifies the buyer that documents have been received. The buyer's bank requests payment from the buyer in exchange for the documents.
*Once the buyer's bank has been paid, or the buyer has accepted the time draft, the bank releases the documents to the buyer. The buyer uses the documents to collect the merchandise.
*When the specified Maturity date is reached, the collecting bank reaches out to the buyer for payment. Once the payment has been made, the buyer’s bank also known as the collecting bank transfers the funds to the bank of the exporter, who then transmits the funds to the exporter/seller.