Clean Drafts versus Documentary Drafts

in Documentary Collections

 

Clean Draft

In a clean draft, no shipping documents are attached to the draft sent to the remitting bank. The documents are sent together with the goods, directly to the buyer. Therefore, unless the credibility of the buyer is unquestionable, using a clean draft in the shipment of goods is risky. The clean draft is more often drawn for the collection of payment for the services, not goods.

Documentary Draft

In a documentary draft, the shipping documents are attached to the draft sent to the remitting bank. The buyer will be able to receive the shipping documents from the collecting bank only after he/she has accepted the draft for payment later or after he/she has paid the draft.