a) Documentary Collections Typical Simplified D/C Transaction Flow 1. The exporter ships the goods to the importer and receives the documents in exchange. 2.The exporter presents the documents with instructions for obtaining payment to his bank. 3.The exporter’s remitting bank sends the documents to the importer’s collecting bank. 4.The collecting bank releases the documents to the importer on receipt of payment or acceptance of the draft. 5. The importer uses the documents to obtain the goods and to clear them at customs. 6.Once the collecting bank receives payment, it forwards the proceeds to the remitting bank. 7. The remitting bank then credits the exporter’s acb)count. b) Letters of Credit Illustrative Letter of Credit Transaction 1. The importer arranges for the issuing bank to open an LC in favor of the exporter. 2.The issuing bank transmits the LC to the nominated bank, which forwards it to the exporter. 3.The exporter forwards the goods and documents to a freight forwarder. 4.The freight forwarder dispatches the goods and submits documents to the nominated bank. 5.The nominated bank checks documents for compliance with the LC and collects payment from the issuing bank for the exporter. 6. The importer’s account at the issuing bank is debited. 7. The issuing bank releases documents to the importer to claim the goods from thecarrier and to clear them at customs.