What is the collector's bank?

The collector's bank is the name of the bank of the importer in the international sales transaction based on documentary credits. It refers to the function of the bank as a facilitator of the transaction on behalf of the importer. In comparison, another bank facilitates the exporter and is called a remitting bank. Intermediaries are banks on both sides of transactions that provide the type of storage to ensure that payment and goods are exchanged simultaneously, so none of the parties need to absorb more risks than others. In principle, the collector's bank collects payment from the importer or buyer. The Bank will only release the payment to the remitting bank of the exporter, when the importer receives delivery documents such as the conosses of the goods from the delivery point.

The role of a collection bank is crucial for stable business relations between countries. International trade controls the country's economy because businesses are able to expand their markets over the national borders and producet more goods that give more people to work. The collection of bank collection acts as an unlimited agent for the importer and ensures the exporter that the money is available to make a payment when the goods are delivered. These types of transactions cannot be canceled or changed on the whim of one side. Once the collecting bank and the remitting bank are involved, the only way to complete the transaction is a strict adherence to the conditions of the documents that the agreement stated.

However, documentary transactions are not limited to international trade. The bank may act as a collector's bank in any transaction where it serves as a mediator to collect payments from the buyer and proceed to the payment for the seller according to the terms of the agreement. An important part is that the document, letter or agreement sets the exact circumstances that allow the collector's bank to release money. If, for exampleis a assembly bank. The collector's bank has another document that determines when it should pay the money he received.