Drawer and beneficiary

Simple is Beautiful; the only thing came in my mind when thought of documentary collection. And I think more and more people are thinking the same in these days. Documentary Collection offers us far greater security than selling on open account; but not as much as a documentary credit. We should therefore be more cautious before starting selling using this method of payment. Documentary Collection Forum is an effort to help you on this way – admin; besttradesolution.com
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Finance
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Drawer and beneficiary

Post by Finance » Mon Jun 16, 2014 7:51 pm

We are processing a documentary collection on behalf of our client.
We are also going to take the proceeds from the collection as collateral.
our client is the exporter. we are sending documents to his buyers bank on DA basis.
Bill of exchange will be sent due in 75 days from BL date.
bill is drawn on end buyer.
can we be the drawer?
Would there be risk associated with this?

Thank you in advance

Gul
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doc. collection

Post by Gul » Tue Oct 14, 2014 8:51 pm

In my opinion, the doc. collection stands separate from any agreements made between the bank and it's client.
You cannot replace the name of the drawer (you client, exporter) on the presentation letter and insert your bank's name.
The drawer should remain the exporter, since the invoices are issued in the name of the exporter.

Since the money under doc. collection will be paid by the collecting bank to remitting bank's account (i/o directly to exporter's account) you will have the control over the received fund.
In order to take the proceeds under doc. collection as the collateral you may want to sign a separate agreement with you client, can be an assignment of proceeds issued by your client.

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