Back to Basics – Documentary Collections – Considerations and Risks

  • Requires a certain trust in the importer i.e., their standing and financial position.
  • No previous adverse experiences i.e., payment delays, non-payment.
  • Importer should be located in a politically stable country.
  • There is a possibility to retain control of the goods via documents of title i.e., bills of lading or consignments to a bank (with such bank's prior agreement).
  • There must be an understanding that one of the parties will take out necessary insurance cover for the transit of the goods. 



Main risks:


Importer/Buyer Risk (Credit Risk) - e.g., an importer may not pay for the goods due to insolvency or wilful default.


Country Risk - e.g., an importer may be more than willing to pay for goods received but its Government may introduce laws (i.e., exchange controls) which prevent payment being made. 


Transit Risk - e.g., the need to insure risks for the movement of goods including damage, loss and theft. loss and/or damage.







This subject is covered in far greater detail within our training module ‘documentary collections in practice' which can be purchased at


Back to recent articles