• Simple and inexpensive way of handling documents
• Payment takes place faster than the open account payment
• Protected ownership of the goods and the ability to dispose of it, which is much more favorable than for delivery of goods in the open account

When entering into a contract, the Buyer and Seller will specify the method of payment for the goods/services:

• Cash Against Documents (CAD) - Exporter's commercial and shipping documents will be sent to importer's bank and delivered to the importer only after the funds are collected. This way the importer is prevented to take the goods from the carrier until the payment is made.
• Documents Against Payment (D/P) - Similar to a CAD transaction, the exporter's commercial and shipping documents are sent via importer's bank  in order to collect the payment. In addition to the export documents, the exporter sends a draft payable at sight (this is why it has written "at sight").
• Documents Against Acceptance (D/A) - A deferred payment is offered to importers who are ready  to accept a time draft drawn upon them . By accepting such a draft, the importer legally recognises the debt. Acceptance is made when the importer puts a signature to the draft's face. The bank delivers shipping documents to the Importer.
  
  

After being collected based on the underlying contract, the shipping  documents   serve  as a proof of goods delivery and will also be  used by the exporter to collect payment.  Since the contract stipulates that the goods will be paid via documentary collection, the exporter will start the procedure. The entire process of documentary collection could be divided into three following phases:

• Establishing the terms of collection (collection instruction/order) by the exporter
• Sending instructions with with required documents to the remitting bank
• Presentation of documents to the collecting bank

• Collection (Clean and Documentary) - Seller's order instructing the bank to deliver the documents to the buyer via a bank in the buyer's country, provided the buyer pays immediately or accepts the draft drawn upon him.
• Cash Against Documents (CAD) - Exporter's commercial and shipping documents will be sent to importer's bank and delivered to the importer only after the funds are collected.
• Documents Against Payment (D/P) - Similar to  CAD transaction, the exporter's commercial and shipping documents are sent via importer's bank for the purpose of funds collection.
• Documents Against Acceptance (D/A) - A deferred payment is offered to importers who are ready  to accept a time draft drawn upon them.