What is Cash Against Documents Financing?
Cash against documents funding or import financing through the documentary collection is a robust type of cash on delivery (COD) payment arrangement for international transactions. Once the importer or funding source pays the invoice in full; the exporter instructs a bank to hand over shipping and title documents to the importer. At this point, the goods become available. This process is also called documents against payment or documentary collection.
The seller sends the documents to the importer only against payment or acceptance of a bill of exchange. A bank may guarantee the bill of exchange by providing a lowered risk for the exporter. ARFunding.org has 20 years experience in the documentary collection process; we are excited to offer your import business this low-cost alternative to the letter of credit.
How Does Cash Against Documents Work?
Cash Against Document or documentary collection is a process in which a seller instructs their bank to forward documents related to the export of goods to a buyer’s bank with a request to present these documents to the buyer for payment. It also indicates when and conditions on which the bank can release these documents to the buyer.
As the funding source for US-based Import companies, ARFunding.org pays the seller (our client’s supplier) when documentation is presented that proves the finished goods meet all quality, quantity, and timeliness requirements of the account Debtor (our client’s customer).