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Express capital group

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Letter of Credit

is one of the safest mechanisms available for an exporter to ensure that he gets his payment correctly and the importer is also assured of the ...

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Express Capital Group

Letters of credit accomplish their purpose by substituting the credit of the bank for that of the customer, for the purpose of facilitating trade.

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Glossary

All A B C D E F G H I L M N O P Q R S T U V W

Acceptance Letter of Credit

A letter of credit that, in addition to other required documentation, requires presentation of a term draft drawn on the bank nominated as the accepting bank under the letter of credit.

Accepted Draft

A bill of exchange accepted by the drawee (acceptor) by putting his signature (acceptance) on it's face. In doing so, he commits himself to pay the bill upon presentation at maturity.

Accepting Bank

A bank that by signing a time draft accepts responsibility to pay when the draft becomes due. In this case the bank is the drawee (party asked to pay the draft) but only becomes the acceptor (party accepting the responsibility to pay) upon acceptance (signing the draft).

Acceptor

The party that signs a draft or obligation, thereby agreeing to pay the stated sum at maturity.

Account Party

The party that instructs the bank (issuing bank) to open a letter of credit. The account party is usually the buyer or importer.

Advance Against Collection

A short term loan or credit extended to the seller (usually the exporter) by the seller's bank once a draft has been accepted by the buyer (generally the importer) of the seller's goods. Once the buyer pays the loan is paid off. If the buyer does not pay the draft, the seller must still make good on the loan.

Advance payment

Trading method in which the buyer pays for the goods before they are dispatched. Used where the buyer is of unknown creditworthiness and is unable to obtain a letter of credit.

(Also used as a matter of convenience for small orders).

Advice

The forwarding of a letter of credit, or an amendment to a letter of credit to the seller, or beneficiary of the credit, by the advising bank (typically the sellers bank).

The term "advice" connotes several types of forms used in the banking field. In general terms an advice is a form of letter that acknowledges a certain action or result in regards to a customer's relation to the bank. Examples include credit advice, debit advice, advice of payment, and advice of execution. In commercial transactions, information pertaining to a business activity such as the delivery of goods.

Advice of fate

A bank's notification of the status of a collection that is still outstanding.

Advised Credit

A letter of credit whose terms and conditions have been forwarded by a bank.

Advising bank

Bank (also referred to as the seller's bank or exporter's bank), usually in the seller's country, whose primary function is to authenticate the letter of credit and advise it to the seller.

The Advising bank MAY also take on other roles in the transaction, e.g.:

* confirm the letter of credit (confirming bank)
* accept a term bill of exchange (accepting bank)
* pay the seller upon presentation of documents (paying or negotiating bank)

After Date

A notation used on financial instruments (such as drafts or bills of exchange) to fix the maturity date as a fixed number of days past the drawing of the draft. For example, if a draft stipulates "90 days after date" it means that the draft is due (payable) 90 days after the date it is drawn. This has the effect of fixing the date of the maturity of the draft, independent of the date of acceptance of the draft.

After sight

A notation on a draft that indicates that payment is due a fixed number of days after the draft has been presented to the drawee. An example of which is "30 days after sight" which means that the drawee has thirty days from the presentation of the draft to make payment.

Agent bank

A bank acting for a foreign bank or a bank handling administration of a loanin a syndicated credit.

Air waybill

Transport document used in air freight. Serves as a receipt for the goods and evidence of carriage contract.

An airway bill is used by many truckers as a through document for coordinated air/truck service.

Airway bills are not negotiable. The airline industry has adopted a standard formatted waybill that accommodates both domestic and international traffic. The standard document was designed to enhance the application of modern computerized systems to air freight processing for both the carrier and the shipper.

An air waybill is not a document of title and so is not needed by the consignee in order to claim the goods from the carrier.

All risks insurance

Extensive insurance coverage of cargo including coverage due to external causes (risks set out in Institute of London Underwriters Cargo Clauses A.) such as fire, collision, pilferage, etc., but usually excluding such "special" risks such as those resulting form acts of war, labor strikes, perishing perishable goods, and from internal damage due to faulty packing, decay, or loss of market.

Amendment

An addition, deletion or change in a legal document.

A change in the terms and conditions of a letter of credit (e.g., extension of the letter of credit's validity period, shipping deadline, etc.), usually to meet the needs of the seller. The seller requests an amendment of the buyer who, if he agrees, instructs his bank (the advising bank) who then notifies the seller of the change. In the case of irrevocable letters of credit, amendments may only be made with the agreement of all the parties to the transaction.

Applicant

Buyer/importer in a letter of credit transaction, who applies to the Issuing Bank for a letter of credit in favor of the seller (beneficiary).

May also be referred to as the accountee or accreditor.

Approval basis

If documents containing discrepancies are presented to the nominated bank under a letter of credit, the bank can forward the documents to the issuing bank for approval, with the beneficiary's agreement. Because of the risk of loss in transit and delay's resulting in interest loss, however, it is recommended that the beneficiary first try to correct the document; but, if that is not possible, the beneficiary asks the nominated bank to contact the issuing bank for authorization to accept the discrepancies.

Issuing banks charge a fee to accept discrepant documents if they will, in fact, accept them.

Arrival notice

A notice furnished to the consignee and shipping broker alerting them to the projected arrival of freight and it's availability for pickup.

Assignment

The transfer of rights, title, interest, and benefits of a contract or financial instrument to a third party.

The beneficiary of a letter of credit is entitled to assign his claims to any of the proceeds that he may be entitled to, or portions thereof, to a third party. Usually the beneficiary informs the issuing bank that his claims under the letter of credit were assigned and asks the bank to advise the assignee (third party) that it has acknowledged the assignment. The validity of the assignment is not dependant on bank approval. In contrast, the transfer requires the agreement of the nominated (beneficiary) bank. An assignment is possible regardless of whether the letter of credit is transferable.

At sight

Terms of a financial instrument that is payable upon presentation or demand. A bill of exchange may be made payable, for example, at sight or after sight, which (respectively) means it is either payable upon presentation or demand or within a particular period after the demand is made.

Availability

In letters of credit, refers to the availability of documents in exchange for payment of the amount stated in the letter of credit.

Availability options are as follow:

By sight payment: payment on receipt of the documents by the issuing bank or the bank nominated in the letter of credit.

By deferred payment: payment after a period specified in the letter of credit, and the payment thereof at maturity.

By acceptance: acceptance of a draft (to be presented together with other documents) by the issuing bank or by the bank nominated in the letter of credit, and the payment thereof at maturity.

By negotiation: the giving of value by the nominated bank to the beneficiary for the documents presented, subject to receipt of cover from the issuing bank.

Avalisation

Payment undertaking given by a bank in respect of a bill of exchange drawn on a buyer. A way of giving security to the drawer of a term bill.

The bill is stamped with wording such as 'Pour aval' and signed by a representative of the bank.

Back-to-back letters of credit

A new letter of credit opened in favor of another beneficiary on the basis of an already existing, non-transferable, letter of credit.

For example, an American merchant agrees to buy cotton from Brazil for sale to a Chinese pants manufacturer. The Chinese manufacturer opens a non-transferable letter of credit for payment to the American merchant who then uses the strength of the letter of credit as a security with his bank for the opening of a new letter of credit to finalize payment to the Brazilian cotton supplier.

The beneficiary of one L/C (prime or 'master' letter of credit) offers this as security for the issue of a further L/C (second or 'slave' letter of credit) in favor of the supplier of the goods.

The bank issuing the second L/C (usually Advising bank to the prime L/C) is called the second Issuing bank.

Bank acceptance

A bill of exchange will be drawn or accepted by a bank to pay specific bills for the customer when the bill becomes due. Depending on the bank's creditworthiness, the acceptance becomes a financial instrument that can be discounted for immediate payment.

Bank draft

A check drawn by one bank against funds deposited to it's account in another bank.

Bank guarantee

Undertaking given by a bank on behalf of a customer to pay the guaranteed party a sum of money if the customer cannot or will not pay.

(Not to be confused with the payment undertaking given under a letter of credit).

Bank release

A document issued by a bank, after it has been paid or given an acceptance, giving authority to a person to take delivery of goods.

Banker's Bank

A bank that is established by mutual consent by independent and unaffiliated banks to provide a clearinghouse for financial transactions.

Banker's draft

A draft payable on demand and drawn by, or on behalf of, a bank itself. A banker's draft is considered cash and cannot be returned unpaid.

Bearer

The person in possession.

A person who possesses a bearer document and who is entitled to payment of funds or transfer of title to property on presentation of the document to the payee or transferor. A buyer, for example, who presents bearer documents of title (such as a bill of lading) to a shipper that transported the goods is entitled to receive the shipment. A seller who presents to a bank a negotiable instrument, such as a check, that is payable to the bearer is entitled to payment of the funds.

Bearer document

A negotiable instrument, commercial paper, document of title, or security that is issued payable or transferable on demand to the individual who holds the instrument, or one that is endorsed in blank. A bearer document authorizes the payment of funds or the transfer of property to the bearer when the bearer presents the document to the person, such as the bank or shipper, that is holding the funds or property.

Beneficiary

The individual or company in whose favor a letter of credit is opened.

Bill of exchange

The most commonly-used financial instrument in international trade.

An unconditional order in writing, signed by a buyer, and addressed to another person (drawee), typically a bank, ordering the drawee to pay a stated sum of money to yet another person (payee), often a seller, on demand or at a fixed or determinable future date.

The most common versions of a bill of exchange are:

A Draft; wherein the drawer instructs the drawee to pay a certain amount of money to a named person, usually in payment for the transfer of goods or services.

Sight drafts; are payable when presented.

Time Drafts; (also called usance drafts) are payable at a fixed future (specific) date or determinable (30, 60, or 90 days etc.) date. Time drafts are used as a financing tool (as with documents against acceptance, D/A terms) to give the buyer time to pay for the purchase.

Also known as a draft.

Bill of lading

Transport document issued by the carrier. Serves as:

* a receipt for goods taken in charge
* evidence of the carriage contract
* a document of title - if appropriately drawn up, can allow bearer to claim the goods.

Blank endorsement

The method whereby a bill of lading is made into a freely negotiable document of title.

Any bearer of a blank endorsed bill of lading has title to the goods and may claim them from the carrier.

Insurance documents can also be blank endorsed, so that any party can make a claim if necessary.

Carriage and insurance paid (CIP)

Incoterm for all transport modes.

Exporter:

* delivers to a named destination
* pays costs, insurance & freight
* provides transport & insurance documents
* pays export duties

Importer:

* pays costs from named destination.

Carriage paid to (CPT)

Incoterm for all transport modes.

Exporter:

* delivers to named destination
* pays cost and freight
* provides export license
* provides transport document

Importer:

* pays cost and freight from named destination
* pays insurance
* pays import duties

Carrier

Party responsible for transport of goods (shipping line, airline, road haulage company etc.)

Case of need

In a collection, party in the buyer's country who is designated by the seller to advise and/or give instructions in the event of problems or disputes. The collection order will specify whether the case of need is authorized to instruct the bank.

Cash cover

In a letter of credit transaction, money is deposited by the applicant with the issuing bank: e.g. when existing credit facilities are fully utilized.

Certificate of analysis/certificate of inspection

Documents that may be asked for by the importer and/or the authorities of the importing country, as evidence of quality or conformity to specifications.

Certificate of origin

Documents that may be asked for by the authorities of the importing country, as evidence of the country of manufacture of the goods and hence qualification for preferential tariffs etc.

Clean collection

Collection in which only the financial document (bill of exchange) is sent through the banks.

(Commercial documents are sent direct to buyer or may accompany the goods).

Collecting bank

Bank in the buyer's country that participates in a collection. The collecting bank may or may not also be the presenting bank, who presents documents to the buyer and claims payment.

Collection

Trading method in which the banking system acts on behalf of the seller, presenting documents to the buyer and only releasing them upon payment (or upon acceptance of a term bill).

Collection order

In a collection, the document in which the seller instructs the banks as to how the collection is to be conducted.

Combined transport bill of lading

Transport document, widely used for container shipments, covering more than one transport mode: e.g.(Rail and Sea) have the same general characteristics as a marine Bill of Lading.

Commercial document

General term for documents describing various aspects of a transaction, e.g. commercial invoice, transport document, insurance document, certificate of origin, certificate of inspection etc.

Commercial invoice

Document drawn up by the seller that summarizes the commercial transaction (goods supplied, price, means of shipment and so on).

Commitment fee

Various meanings:

* Fee charged by a forfaiter for reserving funds to a forfaiting transaction
* Fee charged by a negotiating bank for waiving recourse to the beneficiary in the event of non-payment by the Issuing bank.

Compliant documents

Documents presented under a letter of credit that comply with all its terms and conditions. The banks are only obliged to pay the beneficiary if documents are compliant.

Confirmed letter of credit

Letter of credit in which a bank (usually) in the seller's country adds its own payment undertaking to that of the Issuing bank. Protects against country risk and bank risk as well as customer credit risk.

Confirming bank

Bank who adds its payment undertaking to a letter of credit. See confirmed letter of credit.

Consignee

Party to whom goods are to be delivered.

NB some transport documents such as bills of lading may be made out consigned 'to order'.

Constructive control

The ability to retain control over goods dispatched to the buyer. Usually maintained through transport documents. Where there is credit risk, constructive control is important to the seller. Constructive control may also be important to a bank who has financed a transaction.

Consular invoice

Commercial invoice prepared in the seller's country by the consulate of the buyer's country. Helps the government of the buyer's country control and regulate imports.

Correspondent bank

Overseas bank with whom a bank account has relationships (nostro-vostro accounts) and arrangements for authentication of communications.

Cost and freight (CFR)

Incoterm.

Seller pays transport costs to named destination, but not insurance.

Cost, insurance and freight (CIF)

Incoterm.

Seller pays transport costs and insurance to named destination.

Counter credit

Another name for back-to-back letter of credit.

Country risk

Risk that economic or political instability in the buyer's country will interfere with the buyer's ability to pay for goods supplied.

Cover note

Insurance document evidencing that insurance cover for a consignment has been taken out, but not giving full details.

Currency option

Foreign exchange transaction in which a party buys the right (but not the obligation) to buy or sell a given amount of foreign currency at a given exchange rate at either:

* a given future date

or

* at any point within a future time period.

Deed of Assignment

A banking arrangement between the beneficiary of a letter of credit and a third party - usually the supplier of the goods - who requires an assurance of payment.

The beneficiary of the credit is the assignor: part of the proceeds of the credit are irrevocably assigned to the assignee.

Deed of protest

Document evidencing that a protest has been carried out.

In a collection, a bank may be asked to do this if a bill of exchange is not paid, accepted or honored at maturity.

Delivered at frontier (DAF)

Incoterm

All transport modes, but designed for road and rail.

Exporter

* delivers at the frontier
* pays cost and freight to place of delivery
* provides export license
* provides evidence of delivery

Importer

* pays cost and freight from named destination
* pays insurance
* pays import duties

Delivered duty paid (DDP)

Seller pays all costs (transport, loading, unloading, insurance, import and export duties) associated with delivering the goods to the buyer.

Delivered duty unpaid (DDU)

Incoterm

Exporter

* delivers to a named place
* provides an export license
* provides a transport document
* pays cost and freight to the named place
* does not pay import duties and taxes

Importer

* provides an import license
* pays import duties and taxes

Delivered ex-quay (duty paid)

Incoterm

Exporter

* delivers to a named destination
* pays freight and insurance
* pays export duties
* pays import duties
* pays unloading fees

Where importer is to pay some or all importation costs, wording may be varied, e.g.

DEQ duty unpaid

DEQ VAT unpaid

Delivered ex-ship (DES)

Incoterm

Sea or inland waterway transport only

Exporter

* delivers to a named destination
* pays freight and insurance
* pays export duties

Importer

* pays unloading fees if extra
* pays import duties and taxes

Demurrage

Charges made for storing goods at the port of destination while awaiting collection by the buyer.

These may be incurred unintentionally if the goods arrive before the buyer has received the document of title.

Discounting of bills

Where the payee of a term bill requires payment immediately, a bank may discount the bill, i.e. make immediate payment, deducting an amount for interest over the term of the bill.

Document of title

A transport document (usually a bill of lading) which (when appropriately made out) entitles the bearer to claim the goods from the carrier.

Documentary collection

Procedure in which banks in the buyer's and seller's country act for the seller by presenting commercial documents to the buyer along with a payment demand (usually a bill of exchange).

Documentary credit

Another name for a letter of credit.

Drawee

Party on whom a bill of exchange is drawn, i.e. who is required to make payment.

In the context of collections, usually the buyer.

In letters of credit, the drawee is usually a bank.

Drawer

Party drawing up the bill of exchange. Usually also the payee, to whom the money is due.

Often used synonymously with 'seller'.

Endorsement

Signing on the back of a document so as to assign a right or benefit to another party.

Endorsement by the seller may be necessary for

* transport documents
* insurance documents
* bills of exchange

Engagement

The assumption of payment responsibility in respect of a letter of credit, e.g. when an Advising bank agrees to add its confirmation to a credit.

Evergreen clause

Clause in a standby letter of credit to the effect that it remains in effect indefinitely - the letter of credit only expires upon receipt of advice to that effect from the Issuer. The clause may include a notice period - for example, expiry date is ninety days after advice.

Ex-works (EXW)

Incoterm

Buyer bears all costs and assumes all risks for the consignment once it has been made available for collection by the buyer at the seller's premises or other named place. Seller is not responsible for loading goods onto buyer's vehicle.

This Incoterm places the minimum obligation on the seller by way of costs and risks, and the maximum obligation on the buyer.

Expiry date

The date when a letter of credit ends - i.e. beyond which it cannot be used.

Financial document

Document relating to payment.

The bill of exchange is the financial document most commonly used in collections and letters of credit.

Promissory notes are sometimes used in collections.

Fixed forward contract

Currency is bought or sold at a given future date.

Forward contract

A contract for the sale or purchase of a given amount of foreign currency at a future time at a rate of exchange that is fixed when the contract is made.

Forward option contract

Currency must be bought or sold within a given period of time.

Free Alongside Ship

Incoterm

Exporter

* delivers goods alongside ship
* provides alongside receipt

Importer

* pays freight charges and insurance
* pays for export license and taxes

Free Carrier (FCA)

Incoterm

May be used for any mode of transport. Common for containerised shipments.

Exporter

* delivers to a named place
* provides export license
* pays export duties

Importer

* pays all costs from named place (insurance, import duties, taxes)

Free On board (FOB)

Incoterm

Seller pays for loading onto vessel, but not for carriage or insurance.

Freight Forwarders' Receipt

Transport document issued by Freight Forwarder. Not a document of title.

Guarantee

Bank guarantee.

Undertaking given by a bank on behalf of a customer to pay the guaranteed party a sum of money if the customer cannot or will not pay.

(Not to be confused with the payment undertaking given under a letter of credit).

Householder' protest

Protest that is carried out by a property owner (in practice usually a bank official) when a notary public is not available.

Incoterms

Standard sets of trading conditions setting out responsibilities of buyer and seller

* who pays for carriage, loading, unloading, insurance, duties etc.
* at what point buyer assumes risk.

Commonest Incoterms are FOB, CIF, CFR, EXW.

For full list and more details, see Incoterms in main reference section.

Institute Cargo Clauses

Standard conditions of insurance cover for goods, established by the Institute of London Underwriters.

Referred to as clauses A, B and C.

Insurance certificate

Document giving details of insurance cover for a consignment.

The certificate will cross-reference a master insurance policy and must be countersigned.

Insurance cover note

Insurance document evidencing that insurance cover for a consignment has been taken out, but not giving full details.

Insurance policy

Document setting out full details of insurance in force.

A policy MAY refer to a single consignment and be sent with the other commercial documents. More commonly there is an open policy for all the shipper's consignments. For each consignment an insurance certificate is issued, cross-referencing the policy.

International Chamber of Commerce

International non-governmental body concerned with promotion of trade and harmonisation of trading practice. Responsible for drafting and publishing:

* Uniform Rules for Collections no. 322
* Uniform Customs and Practices no. 500

Inward collection

How a Collecting or Presenting bank will refer to a collection.

Collection that has been received from an overseas bank or exporter for presentation to a buyer in this country.

Inward letter of credit

How an Advising or Confirming bank will refer to a letter of credit.

A letter of credit issued by an overseas bank for advice to a seller in this country.

Irrevocable letter of credit

A letter of credit that cannot be cancelled or amended unless all parties give their agreement. Under UCP 500 all credits are irrevocable.

Revocable credits are very rare.

Issuing bank

Bank giving the primary payment undertaking for a letter of credit, acting on behalf of a buyer.

Latest shipment date

Date on a letter of credit by which the goods must have been dispatched.

At presentation, this date will be checked against the date on the transport document.

Letter of credit

Undertaking given by a bank on behalf of a buyer to pay a seller a sum of money upon presentation of documents complying with all the terms and conditions of the letter of credit.

Mail transfer

Payment instruction sent by airmail from one bank to another.

Maturity date

Date at which payment is due under a term bill of exchange.

Negotiating bank

Bank nominated on a letter of credit to negotiate the bill of exchange, i.e. check the documents, pay the seller and seek reimbursement from the Issuing bank.

Negotiation

'Buying' of a bill of exchange drawn on another party.

When letters of credit are settled by negotiation, a negotiating bank may be nominated to check the documents, pay the seller and seek reimbursement from the Issuing bank. Alternatively the credit may be freely negotiable at any bank.

Nostro-vostro accounts

Accounts held by correspondent banks in each others' currencies.

Each such account has a nostro view - our money held with you - and a vostro view - your money held with us.

Note

Procedure that may carried out to evidence non-payment or non-acceptance of a bill of exchange. A preliminary to a protest. Not recognized in all countries.

Notify party

Party who is to be notified when goods arrive at their destination.

Open account

Trading method in which goods are dispatched to a buyer and paid for after they have been received.

Opening bank

Another name for the Issuing bank in a letter of credit.

Order

On a bill of exchange, 'order' or 'to order' means that the drawer directs payment to be made to another party (usually a bank).

On a bill of lading, 'order' or 'to order' assigns title to the goods to another party.

Outward collection

How the Remitting bank refers to a collection.

Collection being sent overseas to collecting bank(s) for presentation to buyer.

Outward letter of credit

How the Issuing bank refers to a letter of credit.

Packing list

Document listing the contents of a consignment of goods.

May be called for on a letter of credit.

Payee

Party to whom payment is due.

Paying bank

In a letter of credit, bank that is nominated to make payment to the beneficiary upon presentation of complying documents.

Political risk

Risk that political instability in the buyer's country will interfere with a buyer's ability to meet payment obligations.

Postal receipt

Transport document issued by a postal authority. Not a document of title.

Pour aval

Written on a bill of exchange when it is avalised by a bank.

Presentation

In a collection, presentation of documents by a bank to a buyer for payment or acceptance. In a letter of credit, presentation of documents by a seller to a bank for payment, acceptance or negotiation.

Presentation period

On a letter of credit, number of days allowed between shipment of goods and presentation of documents to a bank.

Presenting bank

In a collection, bank that presents documents to a buyer for payment or acceptance.

Prime letter of credit

In a back-to-back letter of credit transaction, the original letter of credit that is offered as security for another letter of credit (second letter of credit).

Principal

Party who instigates a collection, i.e. the seller.

In a collection, all banks act for the principal.

Promissory note

Financial document in which the buyer agrees to make payment to the seller at a specified time.

Protest

Legal procedure that may be administered by a notary public, evidencing non-payment or non-acceptance of a bill of exchange. Useful in support of a subsequent civil action against the defaulter.

In a collection, the presenting bank may be instructed to arrange for this.

Quay

Dock.

Recourse

Right to demand return of money paid.

In negotiation of a letter of credit, payment by the negotiating bank will normally be with recourse (i.e. if the Issuing bank subsequently does not pay).

Red clause

A letter of credit instructing an advance payment to be made to the beneficiary upon advice of the credit but before shipment of the goods.

Reimbursing bank

Bank specified as a source of funds in a letter of credit transaction.

Not a party to the letter of credit.

Release note

Document given by a bank to a buyer to enable buyer to claim the goods from the carrier. Used when goods are consigned to the bank as a means of retaining constructive control.

Remitter

Party making a payment.

Remitting bank

In a collection, bank who remits the documents overseas and in due course receives payment.

Restrictive endorsement

Endorsement transferring title or right to a named party.

Revocable letter of credit

Letter of credit which may be amended or cancelled unilaterally. Offers no security to seller and so very rare.

Revolving letter of credit

Letter of credit designed to cover a series of similar consignments over a period of time.

Road consignment note

Transport document used for goods dispatched by road. Not a document of title.

Second beneficiary

Where a transferable letter of credit is used, party to whom part of the value of this credit is transferred.

Second Issuing bank

Bank issuing the second letter of credit in a back-to-back letter of credit transaction.

Usually the Advising bank to the prime letter of credit.

Shipper

Party sending the goods, i.e. seller.

Sight bill

Bill of exchange payable immediately upon presentation.

Sovereign risk

Risk that a government or sovereign power will default on its payment obligations.

Spot rate

Exchange rate for foreign exchange transactions for immediate or near-immediate execution.

Standby letter of credit

A letter of credit designed to be used only when the applicant defaults on another agreed method of payment.

Statement of default

Used to support utilisation of standby letter of credit.

SWIFT

Society for Worldwide Interbank Financial Telecommunication.

Operates the major interbank electronic communication system for financial messages (payments, letters of credit, securities transactions etc.)

Taking in charge

Receipt of goods by carrier from shipper.

Telegraphic transfer

Payment instruction sent from one bank to another by electronic means, either SWIFT or telex.

The method of choice for urgent or high-value payments.

Term bill

Bill of exchange on which payment is due at a future date.

Also known as tenor bill.

Title document

Transport document in which the bearer has title to the goods, and so can claim them from the carrier at their destination.

To order

On a bill of exchange 'order' or 'to order' means that the drawer directs payment to be made to another party (usually a bank).

On a bill of lading, 'order' or 'to order' assigns title to the goods to another party.

Transferable letter of credit

Letter of credit part of whose value can be transferred to another party (second beneficiary). The Advising bank gives the second beneficiary a transferred letter of credit.

Transhipment

Transfer of goods from one vessel to another during its journey. Some letters of credit prohibit this.

Transport document

Document given by the carrier to the shipper (seller), serving as:

* receipt for the goods
* evidence of a carriage contract.

The transport document MAY also serve as a document of title.

Unconfirmed letter of credit

Letter of credit bearing the payment undertaking of a single bank, the Issuing bank.

Uniform Customs & Practices (UCP)

ICC rules governing the administration of letters of credit Current revision is UCP 600.

Most letters of credit state that they are to be governed by this.

Uniform Rules for Collections (URC)

ICC rules governing the administration of collections. Current revision is URC 522, which replaces URC 322.

Usance letter of credit, usance bill

A letter of credit or bill of exchange where payment is due at some defined future date - the buyer is given a period of credit.

Also known as term or tenor letter of credit (or bill)

Value date

Date on which a foreign exchange contract is executed, i.e. seller delivers foreign currency.

Vostro account

How a correspondent bank refers to funds it holds on behalf of an overseas correspondent.

Warehouse-to-warehouse

Insurance policy which covers goods over the entire journey from the seller's to the buyer's premises.

Weight note

Document issued by either the exporter or a third party declaring the weight of goods in a consignment. This must tally with the weight declared on the transport document and shown on the invoice.

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Phone: +1 (516) 847-2177

Fax: +1 (516) 620-6818

info@express-capital.com

Latest transactions

Express Capital Group provided Letter of Credit valued USD 550,000 to our client toward purchase of Steel Bars.


Express Capital Group provided Letter of Credit valued USD 780,000 to our client toward purchase and import of Rice.


Express Capital Group provided Letter of Credit valued USD 450,000 to our client toward purchase and import of Building Materials.


Express Capital Group provided Letter of Credit valued USD 55,000 to our client toward purchase of Sporting Goods.

Express Capital Group provided Letter of Credit valued USD 148,000 to our client toward purchase and import of Home Furniture from manufacturer.


Express Capital Group provided Letter of Credit valued USD 240,000 to our client toward purchase and import of Kitchenware from manufacturer.


Express Capital Group provided Letter of Credit valued USD 350,000 to our client toward purchase and  import of Clothing from manufacturer.