AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
The short answer
In a documentary collection your UK bank sends the shipping documents to the buyer's bank in Nigeria, which releases them only when the buyer pays (documents against payment, D/P) or signs a bill promising to pay on a set date (documents against acceptance, D/A). Neither bank guarantees payment: with D/P you risk the buyer walking away and leaving goods at the port, and with D/A you have handed over control of the goods on a promise.
Documentary collections sit between cash in advance and a letter of credit. They cost less and take less paperwork than a letter of credit, which is why many UK exporters selling machinery, parts or consumer goods to Nigeria are offered them. They also protect you much less. This guide explains how the two versions work, what goes wrong with Nigerian buyers in practice, and how to decide whether a collection is enough for a given deal.
How a collection works, step by step
- You agree terms with the buyer: the price, the shipping term, and whether the collection is D/P or D/A (and, for D/A, how many days after acceptance the bill falls due).
- You ship the goods and receive the transport document, usually a bill of lading for sea freight or an air waybill for air.
- You hand the documents to your UK bank (the remitting bank) with a collection instruction that says exactly what the Nigerian bank must get before releasing them.
- Your bank sends the documents to the buyer's bank in Nigeria (the collecting or presenting bank).
- The Nigerian bank presents them to the buyer. Under D/P the buyer pays and receives the documents. Under D/A the buyer signs (accepts) a bill of exchange and receives the documents, then pays when the bill matures.
- The buyer uses the documents to clear the goods with the Nigeria Customs Service, and the Nigerian bank remits the money through the banking chain to you.
The banks act as messengers with conditions attached. They handle documents, not goods, and they do not promise that the buyer will pay. Check that your collection instruction states which ICC rules for collections apply and gives clear instructions for what happens if the buyer refuses: who pays storage, whether the goods should be protested or insured, and whether the documents come back to you.
D/P and D/A compared
| Documents against payment (D/P) | Documents against acceptance (D/A) | |
|---|---|---|
| Buyer gets documents when | It pays the collecting bank | It accepts a bill of exchange |
| When you are paid | On payment, subject to transfer time | On the maturity date of the bill |
| Your main risk | Buyer refuses or delays; goods sit at the port gathering charges | Buyer takes the goods and does not pay at maturity |
| What you still control | The goods, through the documents, until payment | Very little once the bill is accepted |
| Closest to | Cash on delivery through banks | Open-account credit with a signed promise |
D/A is effectively trade credit. A signed bill gives you a clearer claim if you have to pursue the buyer, but it does not turn an unreliable buyer into a reliable one. Treat it as an unsecured credit decision and size it accordingly.
Why Nigerian imports make the paperwork matter
Your buyer cannot simply pay you when the documents arrive. Sterling Bank's Form M guidance says a Form M is mandatory for anyone importing physical goods into Nigeria, irrespective of value, and is processed on the Single Window for Trade portal with the importer's TIN. The same page says a proforma invoice used for Form M has a maximum validity of 90 days and that Form M is marked either valid or not valid for foreign exchange, depending on whether the buyer will buy FX through the bank or use its own domiciliary funds. Mondaq's overview of Nigerian import procedure describes the e-Form M being validated by the buyer's authorised dealer bank and sent to Customs, which issues a pre-arrival assessment report.
- Ask for the Form M number before you ship. A buyer who has not opened one is not ready to pay on presentation.
- Match every document. Description, quantities and values on your invoice should match the proforma behind the Form M. Mismatches are a common reason documents are held.
- Regulated goods need SONCAP. For products regulated by the Standards Organisation of Nigeria, Bureau Veritas's SONCAP data sheet (Oct 2024) lists a valid product certificate, final invoice, e-Form M, transport document and the importer's RC number and TIN as the documents for a SONCAP certificate per consignment.
- Know the collecting bank. Confirm it appears on the Central Bank of Nigeria's list of supervised institutions before naming it in your instruction.
For the Nigeria-side detail of Form M and Form A, see our Nigeria guide to Form A and Form M.
A worked example
Example only. A UK firm ships spare parts worth £40,000 to a Lagos distributor on D/A 90 days. The buyer accepts the bill on 1 March and clears the goods. The bill matures on 30 May. If the buyer pays on time, the exporter has given 90 days of unsecured credit at no cost to the buyer. If the buyer pays late or not at all, the exporter holds a signed bill but no goods, and must pursue a debt in Nigeria. Had the same shipment gone on D/P, a refusal would have left the exporter paying storage at Lagos while looking for another buyer or arranging return freight, but still owning the goods.
When a collection is enough, and when it is not
- Use D/P with buyers you know, whose Form M is open and whose bank you have confirmed.
- Use D/A only for buyers with a payment history with you, and for amounts you could absorb if unpaid.
- Consider a letter of credit for first deals or large values, because a bank then undertakes to pay against compliant documents.
- Consider trade credit insurance. UK Export Finance says its export insurance can cover up to 95% of losses from buyer insolvency and certain political events, but not losses from unresolved disputes with the buyer.
Where Pryme fits
A Pryme Business Account holds GBP, USD, EUR and NGN with local account details for each, so the proceeds of a collection can arrive in the currency the bill is drawn in and stay there until you choose to convert with Swap, which shows the rate and the fee before you approve. The Finance agent can track bill maturity dates and prepare reminders for a person to approve. See business multicurrency accounts.
Questions people ask
What is the difference between D/P and D/A?
Under documents against payment the Nigerian bank releases the shipping documents only when the buyer pays. Under documents against acceptance it releases them when the buyer signs a bill of exchange promising to pay on a future date, so you lose control of the goods before you are paid.
Does the Nigerian bank guarantee payment in a documentary collection?
No. The banks handle documents on your instructions but do not undertake to pay. If you need a bank undertaking, you need a letter of credit or a bank guarantee.
What happens if my Nigerian buyer refuses the documents?
The goods stay at the port and charges build up. Your collection instruction should say whether the documents come back to you and who pays storage. You may have to find another buyer or ship the goods back.
Does my Nigerian buyer need a Form M for a collection?
Yes. Sterling Bank's guidance says Form M is mandatory for importing physical goods into Nigeria irrespective of value, whether or not payment is involved. Ask for the Form M number before shipping.
Sources
- Sterling Bank: Form M FAQ (modified 13 Mar 2022) · accessed Oct 2026
- Mondaq (Resolution Law Firm): Import procedure in Nigeria, a brief overview (10 May 2021) · accessed Oct 2026
- Bureau Veritas: Nigeria SONCAP data sheet, Rev 8.4 (Oct 2024) · accessed Oct 2026
- UK Export Finance on GOV.UK: Export insurance policy (updated 27 Jan 2026) · accessed Oct 2026
- Central Bank of Nigeria: Supervised financial institutions · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.