| Field | Meaning | Required |
|---|---|---|
:20: | A unique reference assigned by the sending bank for this advice. It identifies the advice in both banks systems and lets operations teams trace it. It must not | M |
:21: | The reference of the original collection or cheque instruction that this advice relates to. It links the payment advice to the collection the beneficiary bank i | M |
:25: | The account that was credited with the payment, identified by account number. It tells the receiver exactly which account received the funds. A wrong account nu | O |
:32A: | The value date, ISO currency code and amount of the payment, for example 261106EUR48250,00. The receiver compares it with its expected collection amount to conf | M |
:52a: | The institution that ordered the payment, when it differs from the sender of the MT400. It identifies the true originator of the payment instruction. The field | O |
:53a: | The bank that presented the cheque or collection for payment. It identifies the presenting bank in the collection chain. The receiver uses it to confirm the pay | O |
:50a: | The drawer of the cheque or the party that issued the collection instruction. It gives the name and account of the party whose funds were used. The receiver use | O |
:59a: | The beneficiary of the payment, identified by account number and name. The receiving bank credits this party on the value date. The field confirms the funds rea | M |
:72: | Additional information from sender to receiver, such as a narrative explaining the payment or a code for the payment type. It can carry the cheque number or the | O |
:71B: | Details of any charges deducted from the payment, with the charge type and amount in free text. It explains why the advised amount differs from the original col | O |
:30: | The date on which the cheque or collection was paid, when it differs from the value date in field 32A. It tells the receiver when the payment was actually made. | O |
Harbour Bank sends an MT400 to Meridian Bank advising payment of EUR 48,250.00 on 6 November 2026 for collection reference COLL99214, drawn on a Madrid corporate. The related reference matches the outstanding collection, the value date matches the payment date, and Meridian credits the beneficiary and closes the collection.
Valid example from the message catalogue. Scheme rules: MT400 follows the SWIFT collection and cheque advice rules and remains in use for documentary collections and cheque clearing, which have no ISO 20022 equivalent in general use. Domestic cheque cleari
Simple Collection, Payment Against Invoice and Cash on Delivery
What you will learn
Your objective. By the end of this lesson, you will be able to explain simple collection, payment against invoice and cash on delivery. A simple collection, also called a clean collection, is a collection that involves only a financial document, such as a bill of exchange or a cheque, with no shipping documents attached.
Why it matters. Choosing between these methods is a commercial decision, and a business analyst should frame it as a risk and cost trade off.
Chapter objective: How banks help exporters and importers trade safely across borders
Key learning points
- Simple collection: clean collection
- When to use a simple collection
- No document control
- Courier or a carrier collects
- Choosing between these methods
- Documentary credit
Key terms
Documentary credit: A letter of credit, a bank undertaking to pay a seller when the seller presents documents that comply with the credit terms.
Bill of exchange: A written order by one party instructing another party to pay a stated amount to a named person on a stated date.
SWIFT: The Society for Worldwide Interbank Financial Telecommunication, a member owned cooperative that provides secure messaging services for financial institutions.
SWIFT MT message viewer showing Simple Collection, Payment Against Invoice and Cash on Delivery.
Practise this lesson
Exercise
Trace the payment in this lesson through its lifecycle stages.
Use the lifecycle stages in this lesson: acceptance, processing, clearing, settlement, beneficiary credit, ledger posting and reconciliation.
- What to do. Name each stage, state what happens, and say when the payment is truly final.
Correct result. Acceptance validates the instruction. Processing prepares it. Clearing sorts and nets it. Settlement moves the funds. Beneficiary credit puts the money in the creditor account. Ledger posting records it. Reconciliation proves it. Finality is only at settlement, not at acceptance or at status update.
Why. The lifecycle is the map of a payment. If you cannot say which stage a payment is in, you cannot answer where the money is.
Check your understanding
Practice question
Which of the following best describes simple collection, payment against invoice and cash on delivery?
Takeaway and next step
What to remember
The right choice depends on the relationship, the amount, the country risk, and the margin on the deal.
Build a cross-border payment like the one in this lesson and watch the chain, the charges, and the final amount change.
Open the Cross-Border Payment Configurator →
Builds on "Documentary Credit with a Notifying Bank, and Documentary Collection".
Transcript and full text
Show transcript
A simple collection, also called a clean collection, is a collection that involves only a financial document, such as a bill of exchange or a cheque, with no shipping documents attached. The exporter sends the bill of exchange to its bank, the bank sends it to the importer bank, and the importer pays or accepts the bill. Because no shipping documents are involved, the importer does not need the collection to release the goods, which means the exporter has no control over the goods once they are shipped. A simple collection is therefore used mainly where the parties trust each other or the amount is small. The SWIFT messages are similar, with an MT400 instruction and MT410 and MT422 advices. The bank still screens the parties and reports the transaction, and a refused collection still needs instructions from the exporter. Payment against invoice, often called open account, is the simplest method of all. The exporter ships the goods and sends the invoice, and the importer pays by a normal credit transfer within the agreed terms, for example 30 or 60 days after shipment. There is no bank instrument, no document control, and no collection instruction, which makes it fast and cheap. The risk sits entirely with the exporter, who must trust the importer to pay, and the exporter usually manages that risk with credit insurance, with a limit per buyer, or with a long trading history. Most trade between established partners in stable countries is done on open account, because the cost saving outweighs the risk when the buyer is known and reliable. Cash on delivery, known as COD, is the opposite of open account, because the importer pays when the goods arrive, before they are handed over. A courier or a carrier collects the payment on delivery, or the importer pays at the port before the goods are released. The exporter is protected, because the goods are not released until the money is received, but the importer takes the risk that the goods are not what was ordered, because it has not inspected them. COD is common for small shipments, for online sales, and for first orders between new partners, where neither side wants to give the other credit. The payment itself is usually a simple credit transfer or a card payment, not a trade finance instrument. Choosing between these methods is a commercial decision, and a business analyst should frame it as a risk and cost trade off. Open account is cheapest and fastest, but the exporter bears the buyer risk. Cash on delivery protects the exporter, but it limits sales, because many buyers will not pay before inspection. A simple collection adds a bank channel and a formal demand for payment, but it does not control the goods. A documentary collection controls the goods through the documents, but it costs more and takes longer. A documentary credit gives the strongest protection, but it is the most expensive and the most paperwork heavy. The right choice depends on the relationship, the amount, the country risk, and the margin on the deal.
A simple collection, also called a clean collection, is a collection that involves only a financial document, such as a bill of exchange or a cheque, with no shipping documents attached. The exporter sends the bill of exchange to its bank, the bank sends it to the importer bank, and the importer pays or accepts the bill. Because no shipping documents are involved, the importer does not need the collection to release the goods, which means the exporter has no control over the goods once they are shipped. A simple collection is therefore used mainly where the parties trust each other or the amount is small. The SWIFT messages are similar, with an MT400 instruction and MT410 and MT422 advices. The bank still screens the parties and reports the transaction, and a refused collection still needs instructions from the exporter.
Payment against invoice, often called open account, is the simplest method of all. The exporter ships the goods and sends the invoice, and the importer pays by a normal credit transfer within the agreed terms, for example 30 or 60 days after shipment. There is no bank instrument, no document control, and no collection instruction, which makes it fast and cheap. The risk sits entirely with the exporter, who must trust the importer to pay, and the exporter usually manages that risk with credit insurance, with a limit per buyer, or with a long trading history. Most trade between established partners in stable countries is done on open account, because the cost saving outweighs the risk when the buyer is known and reliable.
Cash on delivery, known as COD, is the opposite of open account, because the importer pays when the goods arrive, before they are handed over. A courier or a carrier collects the payment on delivery, or the importer pays at the port before the goods are released. The exporter is protected, because the goods are not released until the money is received, but the importer takes the risk that the goods are not what was ordered, because it has not inspected them. COD is common for small shipments, for online sales, and for first orders between new partners, where neither side wants to give the other credit. The payment itself is usually a simple credit transfer or a card payment, not a trade finance instrument.
Choosing between these methods is a commercial decision, and a business analyst should frame it as a risk and cost trade off. Open account is cheapest and fastest, but the exporter bears the buyer risk. Cash on delivery protects the exporter, but it limits sales, because many buyers will not pay before inspection. A simple collection adds a bank channel and a formal demand for payment, but it does not control the goods. A documentary collection controls the goods through the documents, but it costs more and takes longer. A documentary credit gives the strongest protection, but it is the most expensive and the most paperwork heavy. The right choice depends on the relationship, the amount, the country risk, and the margin on the deal.
Full lesson text (all scenes)
Completing a lesson updates your progress dashboard on the homepage.
Scene timestamps are estimated by allocating the narration text proportionally across the real audio length. The audio playback position is the source of truth: pause freezes the visual, seeking restores the correct scene, replay restarts the scene animation.