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Section Three Documentary Collections 3.1 Parties Involved in a Documentary Collection There are four main parties to a documentary collection transaction -- the principal, the remitting bank, the collecting bank, the drawee. Each party may have several names. The Principal (Seller/ Exporter / Drawer) The principal is generally the seller/exporter as well as the party that prepares documentation (collection documents) and submits (remits) them to his bank (remitting bank) with a collection order for payment from the buyer (drawee).The principal is also sometimes called the remitter. The Remitting (Principal’s / Seller’s /Exporter’s) Bank The remitting bank receives documentation (collection documents) from the seller (principal) for forwarding (remitting) to the buyer’s bank (collecting/presenting bank) along with instructions for payment. Section Three Documentary Collections The Collecting or Representing (Buyer’s ) Bank This is the bank that presents the documents to the buyer and collects cash payment (payment of a bank draft) or a promise to pay in the future (a bill of exchange) from the buyer (drawee of the draft) in exchange for the documents. The Drawee (Buyer /Importer) The drawee (buyer/importer) is the party that makes cash payment or signs a draft according to the terms of the collection order in exchange for the documents from the presenting/collecting bank and takes possession of the goods.The drawee is the one on whom a draft is drawn and who owes the indicated amount. Section Three Documentary Collections 3. 2 Basic Documentary Collection Procedures The buyer and seller agree on the terms of sale of goods:(a) specifying a documentary collection as the means of payment,(b) naming a collecting/ presenting bank (usually the buyer’s bank),and (c) listing required documents. Section Three Documentary Collections Section Three Documentary Collections 3.3 Types of Collection Collections come in three forms.The first,a clea
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