F

    Financed Bills

    Bills sent on collection in which the remitting branch has a financial interest.

    Foreign Bill Purchased (FBP)

    A bill remitted to a correspondent bank in which the remitting branch is financing the exporter - see Financing Export Collections.

    Forward Exchange Contract

    Contract between the Bank and its customer to buy/sell a fixed amount of foreign currency at a future date at a specified rate. This could be for a customer to make payment under a DC or to sell the proceeds received from an export negotiation.

    Freight

    Goods OR the cost of transporting goods.

    G

    General Average

    Loss which is the result of a sacrifice voluntarily made or an expense incurred; for the sole purpose of saving a ship and its cargo in face of a common danger (e.g. jettison of cargo to lighten a ship in distress). The loss is borne proportionately by ship and cargo owners according to their respective interests in the voyage.

    Gross Weight

    The weight of the merchandise in its shipping form, i.e. including all its packaging.

    I

    ICC 322

    Uniform Rules for Collections

    ICC 323

    Standard Forms for Issuing Documentary Credits

    ICC 420

    Guide to the Prevention of International Trade Fraud.

    ICC 460

    Incoterms 1990. Explains the 13 standard Incoterms.

    ICC 500

    Uniform Customs and Practice for Documentary Credits (1993 revision) replaced the previous ICC 400 as from 1 January 1994.

    ICC 522

    Uniform Customs and Practice for Documentary Credits (1995 revision) replaced the previous ICC 322 as from 1 January 1996.

    Import License

    A permit issued by the importing country'S authorities in respect of goods subject to import licensing restrictions.

    Incoterms

    Shipping Terms - see Introduction to International Trade.

    Indemnity

    Also known as Letter of Guarantee (L/G), it is an undertaking given in respect of discrepancies in documents presented under a credit. The beneficiary who issues the indemnity is primarily liable to repay funds received from the negotiating bank in settlement under the credit, if the negotiating bank cannot obtain reimbursement from the issuing bank as a result of documents being rejected by the applicant.

    Inherent Vice

    The propensity of a commodity to self-destruction which gives rise to a high insurance risk, therefore cover is given only after payment of an additional premium (e.g. fruit rots, coal-dust spontaneously ignites).

    International Chamber of Commerce (ICC)

    The international body which promotes and facilitates world trade, and which codifies world trade practices in various publications - see ICC Rules?under Introduction to International Trade.

    Irrevocable Credit

    Constitutes a definite undertaking of the issuing bank and the confirming bank, if any, to honour the credit provided the terms of the credit are observed. It may be advised to the beneficiary without engagement by the advising bank, and cannot be amended or cancelled unless the issuing bank, the confirming bank and the beneficiary agree.

    Issuing Bank

    The bank that opens a documentary credit at the request of its customer, the applicant.

    L

    Letter of Credit (L/C)

    American term for documentary credit. In the United States, the terms D/C can often be confused for documentary collection.

    Letter of Hypothecation

    A promise to hold goods as security taken from customers who are granted loans against goods imported on a collection basis.

    Loan Against Imports (LAI)

    Loans granted to import customers for payment of bills.

    M

    Master Credit

    In back-to-back operations, the original export credit against which the second credit is opened

    Maturity

    Due date of payment of a usance bill or promissory note.

    N

    Negotiable/Non-Negotiable

    Usually used with regard to Bills of Lading: a negotiable B/L is a valid document of title, while a non-negotiable B/L is not - the beneficiary of a DC (the exporter) may send the importer a non-negotiable B/L for information.

    Negotiation

    Purchase of drafts under a documentary credit which the issuing bank has undertaken to pay.

    Net Weight

    The weight of the merchandise before any packaging.

    Non-DC Bills

    Bills not drawn under DC i.e. sent on a collection basis (D/P or D/A). In common usage we distinguish between Non DC bills which are financed collections and DCs which are non-financed.

    Non-Financed Bills

    Bills sent on collection in which the remitting branch has no financial interest.

    Noting

    The first stage in protest of a dishonoured bill: if instructed to protest for non-payment/non- acceptance, the collecting bank must send the bill to a notary public who will represent it to the drawee on the same day it was refused, or the next business day. If the drawee still refuses the bill the notary public notes on the bill: the amount of his charges, the date and his initials. The reason for refusal is shown on a note attached to the bill. The bill is then protested - see Protest.

    O

    Opener

    See Applicant.

    Opening Bank

    See Issuing Bank.

    Order (To)

    The phrase To Order is sometimes shown on Bills of Lading against consignee: this means that the Bill of Lading must be endorsed in blank by the shipper (i.e. not to any particular named party which makes it bearer document and it becomes transferable by delivery.)

    P

    Packing Credit

    A loan given to the beneficiary by the bank to enable him to purchase raw materials. The beneficiary is usually requested to deposit the DC with the bank as security.

    Past Due

    Bill or loan that has not been paid on the maturity date/due date.

    Paying Bank

    The bank that makes payment to the beneficiary of a payment DC after presentation to it of documents stipulated in the DC.

    Perils of the Seas

    They are accidents or casualties of the sea. The ordinary actions of the winds and waves are not included. Heavy or tempestuous weather on a voyage is of sufficient violence to constitute a peril of the sea.

    Power of Attorney

    Authority given to one party to act for another.

    Presentation

    Act of requesting the importer抯 payment/acceptance of an import bill. - See Handling Import Collections.

    Presenting Bank

    The bank that requests payment of a collection bill - may be the Collecting Bank or its nominated branch or local correspondent, which is better placed to contact the importer.

    Principal

    The exporter in collection transactions, being the initiator of the transaction, whose instructions are followed at all stages (may be used to refer to any customer who initiates a transaction e.g. the opener of a DC).

    Promissory Note

    A signed statement containing a written promise to pay a stated sum to specified person at a specified date or on demand.

    Protest

    The formal representation of a dishonoured bill of exchange: the bill is presented by a notary public to the drawee - if refused again, it is noted?- see noting. The notary public then issues a formal protest, an official certificate that the bill has been refused: the drawer can use this certificate to sue the drawee in court.

    R

    Recourse

    The right to claim a refund from another party which has handled a bill at an earlier stage.

    Red Clause Credit

    A credit with a clause which authorises the advising bank to make an advance payment to the beneficiary - see special DCs.

    Reimbursing Bank

    The bank nominated by the DC issuing bank that will pay the value of the DC to the negotiating/paying bank.

    Remitting Bank

    The exporter's bank in collection transactions, which remits the bill to the collecting bank.

    The exporter's bank in DC transactions, which dispatches the documents to the issuing bank.

    Retirement

    The act of paying or settling an outstanding bill or import loan; i.e. payment by the importer to the Bank.

    Revocable Credit

    One that may be amended or cancelled without notice to the beneficiary.

    Revolving Credit

    A credit automatically reinstated after each drawing or upon receipt of authorisation from DC issuing bank, with limits as to the duration of the facility and as to the (cumulative or non-cumulative) amount involved for each drawing - see Special DCs.

    S

    Schedule

    The Remitting/Negotiating Bank's letter covering a bill sent to the Collecting/Issuing Bank, which lists the documents attached and gives collection and/or payment instructions.

    Self-Liquidating

    A transaction is said to be self-liquidating when there is a known source of funds available for its settlement on due date.

    Shipment Date

    The date inserted on the bills of lading evidencing goods received on board is regarded for documentary credit purposes as being the date of shipment.

    Shipper

    See consignor

    Shipping Guarantee (SG)

    Guarantees of this nature are required to enable customers to obtain goods before the arrival of the documents of title, and are issued to the shipping companies by the Bank against an undertaking to forward the bills of lading when they are received. The Bank normally take 100% cash margin against the value of the goods if the customer does not have T/R facility.

    Shipping Terms

    See Incoterms

    Sight

    A bill payable at sight is payable on presentation to the drawee i.e. on demand.

    Snags

    Irregular bills; import and export.

    Standby Credit

    This may be established as security for facilities granted at another branch or bank, usually to a subsidiary of the DC applicant. - see Special DCs.

    Status Report

    Produced by a bank's TCI department or a credit information bureau, giving details of the creditworthiness and business background of traders and manufacturers.

    Substitution

    The act whereby the prime beneficiary substitutes his own documents i.e. invoices and drafts, in back-to-back and transferable credit operations prior to negotiation of the master credits.

    T

    Tenor

    Term or Period of credit granted by the drawer. See Usance Bill.

    Tracer

    See Chaser.

    Trade and Credit Information (TCI)

    A bank department that prepares and distributes status reports on its own customers, and maintains records of traders and manufacturers with whom its customers deal.

    Transferable Credit

    Permits the beneficiary to transfer all or some of the rights and obligations under the credit to a second beneficiary or beneficiaries - see Special DCs.

    Transferee

    A party (2nd beneficiary) to whom a transferable credit is transferred in whole or in part.

    Transferor

    A party (1st beneficiary) at whose request a transferable credit is transferred to a second beneficiary in whole or in part.

    U

    Uniform Customs and Practice for DCs

    See ICC 500

    Uniform Rules for Collections

    See ICC 522

    Usance Bill

    A Bill of Exchange which allows the drawee a term or period of credit (this period is also called usance).

    The term is usually stated in days (e.g. 30 days) or months and starts either from the date of the bill (e.g. 30 days date) or from the date of bill of lading, or from sight by the drawee (e.g. 30 days sight) which in practice means from the date of acceptance.

    An essential feature of acceptance credits and D/A collections.

    W

    Waive

    To relinquish a right: used in collections with BC charges and/or interest to be collected from the drawee: these can be waived in certain circumstances as set out in ICC 522.