Documentary collections to manage and mitigate trade risks accross

Corporate and
Investment Banking
Documentary collections to manage
and mitigate trade risks across Africa
Documentary collections
Standard Bank – your trade partner in, for and across Africa
Documentary collections to
manage and mitigate trade risks
across Africa
As exporters expand into new markets, the importance
of having a banking partner that you can trust is greater
than ever. While you can take prudent steps to know your
buyer, there are many factors beyond your control that can
prevent or delay you from being paid. These can extend
from sanctions to money laundering prevention legislation,
and a host of different in-country regulations.
Using documentary collections (also known as foreign bill
for collection) through Standard Bank’s global network, you
will have peace of mind that you will receive payment.
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Documentary collections
In documentary collections, the seller ships the goods and
then presents documents through Standard Bank with an
instruction to the buyer’s bank to either deliver documents
against (immediate) payment, or deliver documents against
acceptance for payment at a future date. This provides
certainty that under documents against payment, the buyer
will have to give payment instructions before receiving
documents. Also, with certainty that under documents
against acceptance (of a bill of exchange) for payment in
the future, the buyer will first have to accept the bill of
exchange (albeit not constituting a liability to pay on the
bank’s end at maturity) before documents are handed to
the buyer.
Furthermore, you may be concerned that there is a post
shipment risk after dispatching the goods under documents
against acceptance (since it does not constitute a liability
to pay at the bank’s end on maturity), where the buyer is
unable or refuses to pay on maturity. To further mitigate
this risk you may, in addition to the instruction to deliver
documents against acceptance, include an instruction for
the buyer’s bank to guarantee payment at maturity before
the buyer signs the bill of exchange. This is commonly
referred to as an ‘avalisation’ instruction and helps mitigate
non-payment risk.
Documentary collections support your trade activities as:
•
across 20 African countries, Standard Bank can work
with the buyer’s bank providing a safe and secure
environment to manage the flow of documents
•
you remain in documentary control even after
shipment, pending payment or acceptance of the bill
of exchange by the buyer
•
the instruction on the terms of payment is driven by
you within the selling process
•
banks involved will honour the seller’s documents
disposal instructions
•
You can optimise your working capital, where:
−
there is faster conversion of receivables
(before their due date) through discounting
of avalised bills
−
the buyer’s risk can be transferred to their
bankers by avalisation, without recourse to you.
Also, should you wish to be paid immediately to support
your working capital needs under an avalised bill of
exchange, Standard Bank may advance a discounted
payment without recourse to you prior to payment due
date. This is known as discounting.
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The documentary collection process
5. The buyer pays their bank
6. The buyer’s bank settles with the seller’s bank
Buyer’s
bank
Seller
3. Documents
6. Payment
7. The seller’s bank pays the seller. For short-term
financing, under avalised bills, a discounted payment is
advanced to the seller before the due date.
7. Payment
2. Documents
1. Goods shipment
4. Documents
5. Payment
Buyer
Seller’s
bank
1. The seller ships the goods as agreed with the buyer in
the contract
2. The seller presents documents with disposal instructions
to their bankers
3. The seller’s bank presents documents to the buyer’s
bank with instructions specified by the seller
4. The buyer’s bank acts according to instructions
of the seller
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Supporting your trading activities across
different regulatory environments
With a deep understanding of the regulatory environments
across our footprint in Africa, Standard Bank offers
documentary collections that meet the requirements of
the applicable exchange control regulations. In our capacity
as an Authorised Dealer, we articulate the regulatory
requirements relating to documentary collections to help
you minimise risk in trade and benefit from working
capital solutions.
Contact us for information on international
trade services in, for and across Africa
For further information on any of our products and
services, contact:
Your nearest Standard Bank International Trade
Services office
Telephone: 0860iTrade/0860 487 233
Visit our website at www.standardbank.co.za (select
Corporate and Institutions, click on Products and Services,
and click on International Trade Services under
Transactional Services).
Authorised financial services and registered credit provider (NCRCP15)
The Standard Bank of South Africa Limited (Registered Bank) Reg. No. 1962/000738/06 SBSA 182808-7/14
Disclaimer
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