True or false: In a documentary collection, the remitting bank is the agent of the importer
Indicate whether the statement is true or false
False, in a documentary collection the exporter uses a remitting bank as its agent to collect the payment from the importer. The exporter ships the merchandise to the importer, but the exporter retains title to the goods. The exporter next presents the shipping documents to the remitting bank. These shipping documents include the bill of lading, the commercial invoice, the packing list, the insurance certificates, and consular invoices. The exporter also submits a draft or bill of exchange to the remitting bank that is drawn on the importer. The remitting bank (the agent of the exporter) sends the documents, the draft, and the instructions to a bank in the importer's country. This bank is called the collecting, or presenting, bank. The collecting bank could be a branch of the remitting bank in the foreign country, or it could be a separate bank in the foreign country that does business with the remitting bank. The collecting, or presenting, bank notifies the importer that the documents are available and that they may be obtained when the importer complies with the terms of the documentary collection.
The exporter will have instructed its remitting bank that the payment should be collected from the importer in one of two ways, either as a documents against payment (D/P) collection or as a documents against acceptance (D/A) collection.
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