According to URC 522, Clean Collection means collection of financial documents without commercial documents; or collection by a bank from the payer without the condition of handing over the commercial documents.

Credit or financial instruments that the holder uses to entrust a collection bank to a collection bank include the following:

• Bill of exchange
• Promissory note
• International check
• Financial Invoice
• Other valuable vouchers.

The method of smooth collection is used in cases where the beneficiary and the payer must trust each other, because whether the payment is made or not is completely dependent on the will of the payer, and the bank The goods are the middlemen of the collection. This method is rarely applied in commercial payment, because it does not guarantee the interests of the exporter, because the receipt of goods is completely separate from the payment stage, so the importer can receive the goods and not pay. or late payment.

The method of smooth collection is applied in the payment of commercial services such as collection of electricity, water, transportation charges, insurance and non-commercial such as collection of dividends, dividends, loan interest, money rewards, compensation, inheritance, … because the characteristics of these transactions are that the payer must use or enjoy the results to pay the money.

In order to limit the risk when applying this method, the collection trustee needs to have a sanction clause specified in the underlying Contracts and in the Collection instruction. For example, in the base contract, the two parties need to agree on a specific time to pay or accept payment immediately after the bank presents the payment instrument. If you pay late, you will have to pay interest on late payment. Or in the collection instruction, it must also specify other similar sanctions such as insufficient payment by the payer, giving illegal and reasonable reasons for refusing to pay, etc.

Above is our consultancy about this issue. If you need more detailed advice and answers as well as how to access this service, please contact directly the Deputy Director of Sales: Lawyer Nhat Nam via hotline: 0912.35.65.75, 0912.35.53.53 or call the free legal consultation hotline 1900.6575 or send a service request via email: lienheluathongbang@gmail.com

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