A collection order is a settlement document in an intermediary banking collection operation, which is formed by a creditor for a bank. Through it, he will claim the amount of the debt from the payer in an indisputable manner.
The concept and essence of collection settlements
Collection is a method of settlements between the parties, in which not the supplier, but the bank receives the amount due or the acceptance of payment from the buyer's bank. The basis for this is monetary, settlement or trade documents. The claim to the bank by the creditor to claim the amount of the debt from the debtor is carried out by means of a collection order.
At the same time, banks in such operations act only as an intermediary link and are not responsible for non-payment of documents by the buyer.
Distinguish between clean and documentary collection. In the latter case, documents are required that confirm the fact of delivery (delivery notes, invoices, etc.)
In international trade, collection is a bank order to the exporter to receive payment from the importer when the supporting documents are handed over to him, and to transfer the money to the exporter without any obligations from the banks. Unlike letters of credit, collection is used to establish a relationship of trust between the seller and the buyer.
To reduce the risks of insolvency of the buyer and the impossibility of paying for collecting documents, suppliers often insist on providing them with a bank guarantee.
Concept and types of collection orders
Collection orders have a unified form in Russia under the number 0401071. They can be used in three main cases:
- when the indisputable procedure for collecting money is established by law - in this case, the collection order must contain a reference to the law;
- for the recovery of enforcement documents - the document must contain a reference to the writ of execution, its date and case number, as well as the name of the body that made this decision; such collection orders are accepted by banks only with the attachment of the original or a duplicate of the executive document;
- provided that the payer provides the bank with the right to write off funds in favor of the creditor (supplier) - for example, the payer writes an application to the bank with permission to issue collection orders to his supplier under the agreement.
Distinguish between acceptance-free (debiting is carried out without the request of the account holder) and acceptance (debiting is made only after confirmation of the account holder) collection orders. Non-acceptance orders, for example, can be issued by the tax or the Pension Fund when tax arrears are identified. In this case, the banks do not consider the objections of the payers regarding the write-off of money from their accounts in an indisputable manner.
