Documentary Collection, also known as cash against payment, is a common method for settling international trade transactions. Guided by the International Chamber of Commerce's publication no. 522 (URC 522), it involves banks handling documents to obtain payment and/or acceptance from the buyer.  

Advantages:

• Increased Likelihood of Payment: By requiring payment or acceptance before the buyer can obtain the goods, Documentary Collection significantly enhances the seller's chances of receiving payment.   
• Assurance of Shipment: While the buyer may not inspect the goods before payment, Documentary Collection provides some assurance that the shipment will arrive.
• Opportunity for Resale: In a D/A (Documents Against Acceptance) transaction, the buyer can potentially resell the goods before making full payment, improving their cash flow.

Disadvantages:

• Reduced Payment Security: Compared to methods like payment in advance, bank payment obligations, or documentary credits, Documentary Collection offers lower payment security for the seller.
• Lack of Bank Guarantee: Unlike documentary credits, there is no bank guarantee of payment, leaving the seller reliant solely on the buyer's creditworthiness.
• High Costs of Unpaid Collections: If the collection remains unpaid, the seller may incur significant costs, such as finding alternative buyers, particularly for perishable goods, in a foreign market.

Conclusion:

Documentary Collection presents both advantages and disadvantages for international trade transactions. Both sellers and buyers must carefully weigh these factors before selecting this payment method.