The Collection is a product/ service used for settling foreign or local trade payments. The purpose of the Bills for Collection is to provide our customers with a standard method for settling due amounts relating to the import/ export of goods and services.
A collection bill may be sent at the request of our customer (seller-drawer) to collect an amount due for the supply of merchandise, to the buyer (drawee) in accordance with their mutual agreement either for sight payment (D/P basis) or usance payment (D/A basis).
Payment to the seller under usance bills could be guaranteed by Al Ahli Bank of Kuwait - Egypt to the bank credit policy requirements.
A bill for collection is an amount of money payable by the drawee to a drawer through banks.
Such bills are divided into:
- Clean Collection: Contains only financial papers (e.g. Draft, Bill of Exchange or promissory note)
- Documentary Collection: Contains financial & amp; commercial papers (e.g. Shipping Documents)
- D/P: To deliver documents against payment
- D/A: To deliver documents against acceptance
The collection bills are either Incoming Collections, a service provided to the buyer/ importer or Outgoing Collections, a service provided to the seller/ exporter.
Drafts or bills of exchange could be avalized. An aval is an unconditional and irrevocable guarantee by the bank (at buyer end) written on the face of a bill of exchange or promissory note.
Collections are governed by the Uniform Rules for Collections, 1995 Revision, ICC Publication No. 522.
- Benefits of a collection to the seller: Title documents could be channeled through the banking system. Faster collection of funds
- Benefits of a collection to the buyer: He could defer payment until goods arrival (acceptance), thus, obtaining full finance from the seller, having also the ability to obtain finance from banks
- Benefits of a guaranteed payment to the seller: He receives immediate cash (if the bill is discounted). He is relieved from administration and receivable collection problems and avoids sovereign and buyer risks
- Benefits of a guaranteed payment to the buyer: He is provided with another form of finance and avoids complex loan documentation