Glossary
Acceptance
The act of giving a written undertaking on the face of a usance bill of exchange to pay a stated sum on the maturity date indicated by the drawee of the bill.
Affreightment
A transportation contract whereby a transportation company, shipowner or operator agrees to carry goods in return for a sum of money, the sum being paid called “freight”.
Airway Bill
Airway bills (AWB) are issued by airlines when goods are sent by air freight as evidence of the contract of carriage, but it is not a document of title to the goods. Hence, the AWB is non-negotiable.
All Risk Clause
Indicates that a marine insurance policy covers a comprehensive range of risk to the cargo insured.
Aval
Aval (or endorsement) is a guarantee added by a bank , in case the first party does not fulfill the obligation of the payment. It will usually take the form of the following words being placed on the reverse of a Bill of Exchange “Endorsed by way of aval for & on behalf of ...Bank ...Authorised signature. “ The words “pour aval” may also be used.
Bank Draft (B/Dft)
A cheque drawn by one bank against funds deposited to its account in another bank.
Bill of Exchange (BE)
An unconditional order in writing addressed by the drawer (Exporter) to the drawee (Importer) requiring the drawee to pay a sum of money to, or to the order of, a specified institution/person (payee) or to the bearer on demand, or at a fixed or determinable future time.
Bill of Lading (B/L)
A receipt issued by shipping companies as evidence of a contract of carriage, it states the details of the agreed upon transportation between specific locations and pre-payment of freight charges for goods carried by sea. It acts as a document of title to the goods being shipped that will only be released at the point of discharge against the production of an original Bill of Lading.
Carriage and Insurance Paid (CIP)
Incoterms means that the Exporter is responsible for the payment of freight to carry goods to a named overseas destination. The risk of loss or damage is transferred from the Exporter to the Importer when the goods have been delivered into the carrier's custody.
Carriage Paid To (CPT)
Incoterms mean the Exporter is responsible for the payment of freight to carry goods to a named overseas destination. The risk of loss or damage is transferred from the Exporter to the Importer when the goods have been delivered into the carrier's custody.
Cash against Documents (CAD)
An arrangement under a Documentary Collection in which an Exporter instructs the presenting bank to hand over shipping and title documents upon receipt of full payment from the Importer. In this way, the Importer cannot take possession of goods without paying.
Certificate of Origin (CO)
This is a document which Is sometimes required by the importing country’s authorities. It identifies the country where the goods originated and may be necessary in order to assess import duties.
Claused Bill
A bill of lading with a notation that indicates that goods were damaged or there is a shortage of the goods stated ( Also called foul bill of lading).
Commercial Invoice
A document which details the transaction between an Exporter and an Importer. At a minimum it should give the name and address of the Exporter and Importer, the date of the sale, a description of the goods sold, the quantity, the unit price, the terms of sale, and the total monetary amount due. If it is an invoice between Importer and Exporter of different countries it should also indicate the kind of currency.
Consignee
A person or dealer to whom something, esp. goods, are consigned.
Consignor
A Person or firm (usually the Exporter) who delivers a consignment to a carrier for transporting it to a consignee (usually the Importer) named in the transportation documents. Ownership (title) of the goods remains with the consignor until the consignee pays for them in full. Also spelled as consigner.
Contained Transport / Multimodal Bill of Lading / Combined Bill of Lading
A document issued for containerised door-to-door shipments that have to use different ships and/or different means of transportation (aircraft, railcars, ships, trucks, etc.) from origin to destination. The principal carrier or the freight forwarder (who issued the multimodal Bill of Lading) takes on full liability under a contract of carriage for the entire journey and over all modes of transportation. Also called combined bill of lading, combined transport bill of lading, intermodal bill of lading, or multimodal transport bill of lading.
Cost of Freight (CFR)
(CFR) Incoterms mean the Exporter must pay the costs and freight necessary to bring the goods to the named port of destination but the risk of loss of or damage to the goods, as well as any additional costs due to events occurring after the time the goods have been delivered on board the vessel is transferred from the Exporter to the Importer when the goods pass the ship's rail in the port of shipment.
Cost, Insurance and Freight (CIF)
Incoterms mean that the Exporter is responsible for the payment of insurance and all other charges up to the named port of destination and to clear the goods for export.
Credit Insurance
Insurance protection policy against abnormal losses from unpaid accounts receivable, often a requirement of banks lending against accounts receivable.
Credit Limit
A limit on the total amount of credit that will be extended.
Delivered At Frontier (DAF)
Incoterms mean the Exporter must supply the goods at their own risk and expense delivered to a named place (usually a border location) by a specified time. The Importer is responsible for the importation.
Delivery Duty Paid (DDP)
Incoterms means the Exporter must supply the goods at his or her own risk and expense to a named place in the country of importation. The Exporter is responsible for importation, payment of duty, and on carriage to the location agreed upon with the Importer.
Delivery Duty Unpaid (DDU)
Incoterms means the Exporter fulfills the contract obligations when the goods have arrived at a named place in the importing country. The Exporter bears all the costs and risk except for import duties and other customs clearance costs.
Delivery Ex Quay (DEQ)
Incoterms means the Exporter pays all freight charges up to the port of destination, unloading onto the quay, and loading onto road or rail vehicles. Thereafter all transport charges must be paid by the Importer.
Delivery Ex Ship (DES)
Incoterms means a form of international trade contract that specifies that the party selling the goods must deliver it to a specific port. Unlike a delivery ex quay, the Exporter is not required to unload the cargo, only to deliver the goods via ship. The Importer would be responsible for further handling thereafter.
Demurrage
Penalty for exceeding free time (usually 72 hours) allowed for taking delivery of a shipment from the shipping or transporting company's warehouse.
Documentary Credit (D/C)
See letter of credit.
Documents against Acceptance (D/A)
An arrangement under a documentary collection in which an Exporter instructs the presenting bank to hand over shipping and title documents to the Importer only when the Importer accepts the accompanying bill of exchange or draft.
Documents against Payment (D/P)
An arrangement under a documentary collection in which an Exporter instructs the presenting bank to hand over shipping and title documents to the Importer only if the Importer fully pays the accompanying bill of exchange or draft.
Drawee
Entity that is expected to accept and pay a bill of exchange (check, draft, letter of credit, etc.) on presentation or on a certain date (called due date or maturity date) ( also payee).
Drawer
Maker or writer of a bill of exchange (check, draft, letter of credit, etc.) who directs the drawee (such as a bank) to pay the stated amount to a third party (the payee). In documentary letter of credit, the drawer is the beneficiary of a letter of credit.
Due Diligence
The process of investigation, performed by CEF, into the details of a potential buyer/seller/deal, such as an examination of operations and management and the verification of material facts.
E-Bonded
The online database provided by our credit insurer AIG and their partner the CI Group. This system is primarily used to process, track and monitor ‘quote’ credit limits, ‘live’ credit limits and increases in credit limits.
Ex Works (EXW)
Incoterms means that the price invoiced or quoted by an Exporter includes charges only up to the Exporter's factory, premises or another named place not cleared for export and not loaded on any collecting vehicle. All charges from there on are to be borne by the Importer.
Factoring
A type of financial service whereby a company sells or transfers title to its accounts receivable to a factoring company, which then acts as principal, not as agent. The receivables are sold without recourse, meaning that the factor cannot turn to the Seller in the event accounts prove uncollectible. Factoring can be done either on a notification basis, where the Seller's customers remit directly to the factor, or on a non-notification basis, where the Seller handles the collections and remits to the factor.
Fiat Currency
Fiat money is money declared by a government to be legal tender. The term derives from the Latin fiat, meaning "let it be done". Fiat money achieves value because a government demands it in payment of taxes and says it should be used within the country as a tender (offering) to pay all debts. In effect, this validates it to be used to buy and sell goods and services and mandates it to pay tax. Where fiat money is used as currency, the term fiat currency is used. Today, most national currencies, including the major reserve currencies, i.e. US dollar, euro, and pound sterling, are fiat currencies.
FIS (Free into Store)
The Exporter pays all costs incurred in delivery of the goods to the importer's store.
Foreign Investment Company (FIC)
A foreign company who’s assets are primarily intended to generate investment.
Forward Exchange Contract
Is a firm and binding agreement between a bank or foreign exchange company and its customer where they agree to sell or buy a specified amount of currency at an agreed rate on a specific date(Fixed Forward) or dates in the future (Option forward).
Forwarding Agent
An Intermediary who arranges for the carriage of goods and/or associated services on behalf of a shipper/Exporter.
Free Along Ship (FAS)
Incoterms means that the price invoiced or quoted by an Exporter includes all charges only up to the ship at the port of departure. The Importer is responsible for loading and all subsequent charges.
Free Carrier (FCA)
Incoterms means that the price invoiced or quoted by an Exporter including charges only up to placing the goods into the custody of the carrier at a place named by the Importer.
Free on Board (FOB)
Incoterms means that the Exporter pays the shipping costs (and usually also the insurance costs) from the point of manufacture to a specified destination, at which point the Importer takes responsibility.
Freight Forwarder
A company specialising in arranging storage and shipping of merchandise on behalf of its shippers. It usually provides a full range of services including: tracking inland transportation, preparation of shipping and export documents, warehousing, booking cargo space, negotiating freight charges, freight consolidation, cargo insurance, and filing of insurance claims. Freight forwarders usually ship under their own bills of lading or air waybills (called house bill of lading or house air waybill) and their agents or associates at the destination (overseas freight forwarders) provide document delivery, deconsolidation, and freight collection services. Also called forwarder.
Full Container Load (FCL)
Standard (twenty or forty-foot) container that is stuffed (loaded) and un-stuffed (stripped) under the risk and account of the shipper or consignee. In general, a FCL container attracts lower freight rates than an equivalent weight of loose (break bulk) cargo. Also called full trailer load (FTL).
House Bill of Lading
A document issued by a freight forwarder to a shipper as a receipt for the goods being shipped with other cargo as one consignment (usually as a full container load). The shipping company's (carrier's) Bill of Lading shows the forwarder as the consignor, and the name of forwarder's agent at the port of destination as the consignee. Although it is not a complete document of title, a forwarder's Bill of Lading has a legal standing similar to that of a normal (carrier's) Bill of Lading. If not specifically prohibited, it is capable of being negotiated and of acceptance by the importer's bank for payment under a letter of credit. Also called forwarder’s bill of lading.
Incoterms
This means “International Commercial Terms” which commenced in 1936, devised and published by the Chamber of Commerce as standard trade definitions most commonly used in International sales contracts in order to be interpreted in exactly the same way by both the Exporter, Importer and the courts in every country.
Insurance
In exchange for a premium(s) a contract is created between the insured (the company/person buying the insurance) and the insurer (the company selling the insurance) to hedge against the risk of a defined contingent loss.
Invoice Discounting
The sale for cash of approved invoices to a financial institution at a percentage of their face value.
Joint Venture
A contractual agreement joining together two or more parties for the purpose of executing a particular business undertaking. All parties agree to share in the profits and losses of the enterprise.
Letter of Assignment
A document with which the assignor assigns its rights to a third party, the assignee.
Letter of Credit (L/C)
A written undertaking by a bank, on behalf of an importer, to pay an exporter a specific amount within a specified time, provided the exporter presents to the bank any documents required under the L/C.
Noting
A Notary Public notes the dishonour of a bill of exchange at maturity by presenting the bill either at the drawee’s address or at the bank if it is payable there. If a bill is noted, the right to protest at a later date remains without limit instead of within one working day of dishonour.
Open Account
Credit that is extended by the Exporter to the Importer, by despatching his goods to the Importer trusting that they will pay in accordance with the terms on the invoice.
Past Due
An account receivable note or other indebtedness not paid when due.
Performance Bond
Written guarantee from a third party guarantor (usually a bank or an insurance company) submitted to a principal (client or customer) by a contractor on winning a bid. Performance bonds ensure payment of a sum (not exceeding a stated maximum) of money in case the contractor fails in the full performance of the contract. These bonds usually cover 100 percent of the contract price and replace the bid bonds on award of the contract. Standby Letters of Credit may also cover this requirement.
Pro-Forma Invoice
A quotation in the form of an invoice prepared by the Exporter that details items, the sale price and any applicable commissions and fees which would appear on a commercial invoice if an order results and it will be clearly marked pro forma.
Promissory Note
A written document in which a borrower agrees (promises) to pay a certain sum of money back to a lender, at a future time, unconditionally.
Protest
A Notary Public will personally call upon the drawee/acceptor and demand payment or acceptance of a Bill of Exchange. If the payment/acceptance is not forthcoming the Notary Public will draw up a Deed of Protest which will give the reasons stated for dishonour. A bill should be protested within one working day of dishonour, otherwise under the Bills of Exchange Act 1882 all signatories are freed from liability on that bill.
Recourse
The legal ability of the purchaser of a financial asset to fall back on the original creditor if the current debtor defaults. For example, an account receivable sold with recourse enables the buyer of the receivable to make claim on the Exporter if the account doesn't pay.
Sight Payment
Payment due on demand.
Supply Chain Finance
Solution for financing goods as companies produce, handle then distribute across a global network from origin to destination along the supply chain.
Telegraphic transfer (TT)
This means the electronic transfer of money from one bank to another via telegraph or cable.
