Documentary collection is equivalent to COD (cash on delivery) or payment by check. The buyer cannot obtain title to a shipment until it reaches its final destination and is paid for. A bank cover letter is generated by the supplier's bank that accompanies the supplier's shipping documents (purchase order, invoice, bill of lading, shipper's letter of instruction, export license and certificate of origin) to the buyer's overseas bank. The cover letter instructs the buyer's bank on how to remit the funds once received from the buyer and also provides instructions to the bank on when to release the title documents to the buyer, i.e., against payment or against acceptance of a time draft. It may also include information about which party is paying for the charges and provides a channel for the foreign bank to send information back to the buyer if necessary.
(1st ref)

Bill of exchange
The exporter can draw up the draft himself on a specially printed form or on his own headed notepaper, or the bank can do it for him. The person who makes out the bill is called the drawer. The exporter forwards the draft to his bank together with the documents relating to the transaction, as well as a documentary bill lodgement form (also called a letter of instructions or a letter of transmittal) which gives his bank detailed instructions on how to proceed. The exporter tells the bank whether to surrender the documents against payment (D/P, also known as cash against documents, CAD) or on acceptance of the draft (D/A, documents against acceptance). He also states whether the documents are to be presented immediately or after arrival of the goods, whether the importer is allowed to inspect the goods first, how the collection procedures are to be made and what is to be done if the draft is dishonoured, i.e. not paid or not accepted. The person who dishonours a B/E is called a defaulter. The bank receives commission for these services, which are known as documentary collections.
(from my own notes gathered from different sources)

HTH