What is a bank collection?

A bank collection is a service offered by a bank to assist businesses in collecting payments from customers located in different geographic areas. The bank acts as an intermediary between the seller and buyer, ensuring the safe and timely transfer of funds and documents. The seller provides the necessary documents, including invoices, bills of lading, and other shipping documents, to the bank, which subsequently sends them to the buyer's bank. The buyer can then obtain the documents in exchange for payment or a promise to pay. Bank collections are typically used by businesses that sell goods or services internationally and need a secure and reliable method of payment collection. Banks charge a fee for this service based on the transaction amount and the number of documents involved.