Trade Glossary (έτσι όπως το βλέπει μεγάλη αμερικάνικη τράπεζα HSBC)http://www.us.hsbc.com/1/2/3/business/other/trade-services/trade-tools/glossary
Glossary of terms
-- A --
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, (usually in exchange for documents of title to goods shipped on D/A terms) - see “Collections – Introduction”.
Acceptance Credit
A documentary credit which requires the beneficiary to draw a usance bill for subsequent acceptance by the issuing bank or the advising bank or any other bank as the credit stipulates - see “Documentary Credits”.
Accommodation Bill
In the context of fraud, a bill drawn without a genuine underlying commercial transaction.
Accountee
Another name for the applicant/opener of a documentary credit i.e. the importer = the person for whose account the transaction is made.
Advice of Fate
The collecting bank informs the remitting bank of:
a) non- payment/non-acceptance or
b) of D/A bill acceptance and the bill maturity date. (see"Handling Import Collections")
Advising
Conveying the terms and conditions of a DC to the beneficiary. The advising bank is the issuing bank's agent and is usually located in the beneficiary's country. (see"Export - DC Advising") The advising bank also takes reasonable care to verify the authenticity of the credit. (ICC UCC 500 Art 7).
Amendment
Any changes/amendments to the term of a DC must be initiated by the applicant and issued and advised to the beneficiary. If the credit is irrevocable the beneficiary has the right to refuse an amendment. (see"Amendments to DCs")
Applicant
Any party, usually the importer, who applies for a documentary credit.
Avalise
A bank's guarantee of payment of a B/E or promissory note by using the endorsement phrase"good per aval" on the note. Alternatively, the bank may issue a separate guarantee.
-- B --
Back-to-Back Credit
A credit issued on the security of an existing credit ("the master credit"). Payment of this credit will be contingent upon documents presented for the"master" credit. Each side of a B/B transaction covers the shipment of the same goods.
Beneficiary
a) A payee or recipient, usually of money.
b) A party in whose favor a documentary credit is established, usually the exporter.
Bill for Collection (BC)
Document(s) or check(s) submitted through a bank for collection of payment from the drawee.
Bill of Exchange (B/E)
B/E is synonymous with"draft". An unconditional order in writing, addressed by one person to another, signed by the person giving the order. The addressee is required to pay a certain sum of money to the order of a specified person or to bearer either on demand or at a fixed or determinable future time.
Bill of Lading (B/L)
A receipt for goods for shipment by sea. It is a Document of Title: see “Documents”.
Bill Receivable (BR)
Bills which are financed by the receiving branch, whether drawn under a DC or not, are treated as BRs by both the remitting branch and the receiving branches - see “Bills Receivable”.
Blank Endorsed
When a bill of lading is signed by the shipper and made out"to order" or"shipper's order" it is said to be blank endorsed. The bill of lading then becomes a bearer instrument. Any holder of a blank endorsed bill of lading can take delivery of goods from the shipping company.
-- C --
Carrier
Person or company whose business is the conveyance of goods e.g. shipping company
Case of Need
A principal may name an agent to whom the collecting bank may refer in specified circumstances. (see the sections on"Collections").
Chaser
Reminder sent by the collecting (or DC issuing) bank to the importer, repeating a request for payment - see “Handling Import Collections”.
Clean
a) A draft/check with no shipping documents. (see"Collections - Introduction")
b) A bill of lading without clauses that expressly declare a defective condition of the goods or the packing.
Clean Bill Purchased
A collection bill purchased with no shipping Purchase documents - see “Financing Export Collections”.
Clean Bill Receivable (CBR)
BR (Bill Receivable) with no shipping documents. The term is more often used for non-trade bills such as travelers checks.
Clean Collection
A draft with no documents Collection attached - see “Collections – Introduction”.
Clean Import Loan (CIL)
A loan granted to an importer for payment of import bills, without the Bank having any claim to the goods.
Collection Bank
The bank in the drawee's country that is instructed to collect payment from the drawee. (see"Collections - Introduction")
Collection Order
A form submitted by an exporter to the remitting/negotiating bank, accompanied by documents, and carrying the exporter's instructions. (see"Collections - Introduction")
Confirming
Assumption of the liability for payment, acceptance or negotiation of correctly presented documents under a DC. Only non-issuing banks can assume this liability. (see"Confirmation of DCs")
Consigment
Shipment of goods.
Consignee
The person/company/bank to whom the goods are delivered - usually the importer or the Collecting Bank - see “Handling Import Collections”.
Consignor
Synonymous with"shipper". The party who sends goods by ship, by land or air.
Contingent Liability
A liability that arises only under specified conditions, e.g. when a bank opens a DC it is liable to make payment only when the DC terms are fully met.
-- D --
DC Bills
Bills drawn under documentary credits.
Deferred Payment Credit (DPC)
Using stipulated documents, a bank can effect payment on a DC at a maturity date that is specified or determinable in the credit terms.
Demurrage
A charge made by a shipping company or a port authority for failure to load or remove goods within the time allowed.
Discounting
An accepted usance bill of exchange is sold at an amount less than its face value.
Discrepancy
Any deviation from the terms and conditions of a DC, or the documents presented thereunder, or any inconsistency between the documents themselves - see “Negotiation under DCs”.
Dishonor
Non-payment or non-acceptance.
Documentary Credit (DC)
A conditional undertaking by a bank to make payment, often abbreviated to “credit”. More precisely, it is a written undertaking by a bank (issuing bank) given to the seller (beneficiary) at the request of the buyer (applicant) to pay a sum of money against presentation of documents complying with the terms of the credit within a set time limit.
The United States is unique in using DOC CRED as the conventional abbreviation for Documentary Credit and D/C as the abbreviation for Documentary Collection.
Documents
The characteristics and importance of the various documents associated with Import/Export operations are explained and illustrated in “Deciding on Documents”.
Documents Against Acceptance (D/A)
Instruction for commercial documents to be released to the drawee on acceptance of the Bill of Exchange - see “Collections – Introduction”.
Documents Against Payment (D/P)
Instruction for documents to be released to the drawee only on payment - see “Collections – Introduction”.
Documents of Title
Documents that give their owner the right to the goods, i.e. Bill of Lading.
Draft
Bill of exchange issued by an exporter and submitted to his bank for collection, or under a DC. Shipping documents are usually attached to the draft/bill of exchange. (This is not to be confused with a"bankers' draft", which is sometimes used as a vehicle for reimbursement.)
Drawee
The drawee (usually the bank) pays the payee (usually the importer) on behalf of the drawer (usually the exporter) according to the terms of the draft that the bank has issued for the drawer. The drawer then presents payment to the drawee according to the terms of the collection order contained in the draft. (Example: In a typical checking transaction, the bank is the drawee of the check, the person writing the check is the drawer and the person to whom the check is written is the payee.)
Drawer
See"Drawee".
Due Date
Maturity date for payment
-- E --
Expiration Date
Latest date, usually in the country of the beneficiary, on which negotiation/payment of a DC can take place.
Export Line
Financing for exporters. (see"Financing Export Collections")
-- F --
Financed Bills
Bills sent on collection in which the remitting bank has a financial interest.
Foreign Bill Purchased (FBP)
A bill remitted to a correspondent bank in which the remitting bank 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. A customer could enter into a forward exchange contract for a DC payment or to sell the proceeds received from an export negotiation.
Freight
Goods OR the cost of transporting goods.
-- G --
General Average
A shipping industry term for a loss incurred by a sacrifice that has been made voluntarily or by 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
International Chamber of Commerce
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 of January 1, 1994.
ICC 522
Uniform Customs and Practice for Documentary Credits (1995 revision). Replaced the previous ICC 322 as of January 1, 1996.
Import License
A permit issued by the importing country's authorities for goods that are subject to import licensing restrictions.
Import Line
Finance facilities for importers covering documentary credits (DC), bills receivables (BR) and import loans (LAI).
Incoterms
Shipping Terms - see “Introduction to International Trade”.
Indemnity
Also known as a Letter of Guarantee (L/G). In a DC transaction, the credit applicant assumes liabiility for repayment of the credit to the negotiating bank if the latter cannot obtain reimbursement from the issuing bank. The applicant has"indemnified" the negotiating bank from any liability.
Inherent Vice
This refers to the propensity of a commodity to self-destruction which gives rise to a high insurance risk. Therefore, coverage is given only after payment of an additional premium (examples of this propensity are fruit which can rot and coal-dust which can ignite spontaneously).
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”.
Inward BC
A bill received by the import department of the collecting bank (IBC).
Irrevocable Credit
The issuing bank and the confirming bank (if any) undertake to honor a specified credit provided the terms of the credit are observed. The irrevocable credit may be communicated to the beneficiary by the advising bank and cannot be amended or canceled 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)
Out of date term for documentary credit. Avoid using it, as it now has other meanings.
Letter of Hypothecation
Loan-holders for goods imported on a collection basis must provide a letter of hypothecation, which is a promise to hold goods as security.
Loan Against Imports (LAI)
Loans granted to Imports customers for payment of bills, usually bills under our DCs.
-- M --
Marginal Deposit
Money held by the Bank to secure the opening of a DC. Normally no interest is paid on these deposits which are held in the Bank’s name whenever possible.
Master Credit
In back-to-back operations, the original export credit against which the second credit is opened
Maturity
Payment due date of a usance bill or promissory note.
-- N --
Negotiable/Non-Negotiable
Usually used with respect 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
a) The process of arriving at payment terms for draft credits that have been agreed to by the issuing bank. The credit may be confirmed, i.e. without recourse to the beneficiary or unconfirmed, i.e. with recourse to the beneficiary.
b) Purchase of an outward collection, thereby providing finance for the exporter.
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). Non DC bills are financed collections and DC bills are non-financed collections.
Non-Financed Bills
Bills sent on collection in which the remitting branch has no financial interest.
Noting
The first stage in protest of a dishonored bill: if instructed to protest for non-payment/non- acceptance, the collecting bank must send the bill to a notary public who will re-present 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)
When"To Order" is shown on Bills of Lading the shipper must endorse it"in blank", i.e. no named consignee. This turns the Bill of Lading into a bearer document and it becomes transferable by delivery.
Outward BC
Bill received for collection by the (OBC) Remitting Bank, handled by the Exports Department.
-- P --
Packing Credit
A loan for the purchase of 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
These are accidents or casualties of the sea. Ordinary actions of the winds and waves are not included. The term is invoked only when 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. A P/A is completed by back-to-back DC applicants to give the Bank authority to substitute invoices and to draw and issue drafts under the master DC if the customer fails to do so - see “Special DCs”.
Presentation
The act of requesting the importer's payment/acceptance of an import bill. (see"Handling Import Collections")
Presenting Bank
The bank that requests payment of a collection bill. This may be the collecting bank, its nominated branch or its local correspondent, whichever party is best located to contact the importer.
Principal
The initiator of a given transaction whose instructions are followed at all stages. In collection transactions the principal is generally the exporter. In other cases the principal may be the customer who opens 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 re-presentation of a dishonored 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 (representing the Bank) 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. Whether or not the drawer sues the drawee, the Bank retains recourse against the drawer & the drawee/endorser.
-- R --
Recourse
The right to claim a refund from another party who has handled a bill at an earlier stage. Ultimate recourse is to the exporter as drawer of the bill. The bank's right of recourse is covered in the TFGA signed by all import/export customers.
Red Clause Credit
A credit with a clause which authorizes the advising bank to make an advance payment to the beneficiary – “Special DCs”.
Reimbursing Bank
The bank that the DC-issuing bank has named to pay the value of the DC to the negotiating/paying bank.
Remitting Bank
a) Collection transactions: The exporter's bank, which remits the bill to the collecting bank.
b) DC transactions: The exporter's bank, which dispatches the documents to the issuing bank.
Retirement
To pay or settle an outstanding bill or import loan. Example: payment to the bank by the importer.
Revocable Credit
Credit that may be amended or canceled without notice to the beneficiary.
Revolving Credit
A credit that is automatically reinstated each time a draw takes place or upon receipt of authorization from the DC-issuing bank. The credit carries limits on duration and on the borrowing amount (cumulative or non-cumulative) involved for each draw. (see"Special DCs")
-- S --
Schedule
The remitting/negotiating bank's letter covering a bill sent to the collecting/issuing bank. The schedule lists the documents that are 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 the due date.
Shipment Date
A bill of lading evidences that goods have been received on board. Therefore the date that is entered on the B/L is considered to be the shipment date for documentary credit purposes.
Shipper
See consignor
Shipping Guarantee (SG)
Shipping guarantees enable customers to obtain goods before the arrival of the documents of title. The guarantees are issued to shipping companies who thereby agree to forward the bills of lading to the bank. If the customer does not hold a trust receipt, the Bank takes 100% cash margin against the value of the goods.
Note:
Within the context of a shipping guarantee, a bank is considered to be a dealer in goods as well as in documents.
Shipping Register
The register that lists all goods for which the imports department is handling documents, listed according to the ship carrying the goods. (see"Handling Import Collections")
Shipping Terms
See Incoterms
Sight
"Payable at sight" is synonymous with"payable on demand", i.e. payable upon presentation to the drawee.
Snags
Irregular bills, whether for import or export.
Standby Credit
Established as security for facilities granted at another branch or bank.
Status Report
Provides details of the creditworthiness and business background of traders and manufacturers. Status reports are produced by a bank's trade and credit information (TCI) department or by a credit information bureau.
Substitution
Prior to negotiation of the master credits in back-to-back and transferable credit operations, the prime beneficiary may substitute documents such as invoices and drafts.
-- T --
Technical D/A
A D/P transaction in which are bills purchased by the bank but it does not control the goods. Because of this the bill is accounted for as a D/A with 100% cash risk.
Examples:
When the buyer is the consignee for an airway bill, the bill of lading is sent directly to the buyer. When the buyer is the consignee for a parcel post receipt, the forwarder's cargo receipt is presented in place of the bill of lading.
Tenor
Term or Period of credit granted by the drawer. See Usance Bill.
Tracer
See “Chaser”.
Trade and Credit Information (TCI)
The bank department that provides details of the creditworthiness and business background of traders and manufacturers.
Trade Financing General Agreement (TFGA)
An agreement between the bank and all of its import and export customers that gives the bank recourse in all transactions. The TFGA was formerly known as the General Security Agreement.
Transferable Credit
Permits the beneficiary to transfer all or some of the rights and obligations of the credit to a second beneficiary or beneficiaries - see “Special DCs”.
Transferee
The second beneficiary or benefiaries of a transferable credit.
Transferor
The first/original beneficiary who originates a transferable credit.
Transit Interest
The amount of interest that is incurred on a DC from the date of negotiation to the date that the bank receives reimbursement. The calculation is made by the bank.
Trust Receipt (T/R)
A T/R is issued for a TFGA transaction and is based upon the terms of the TFGA. It describes the following terms of agreement between the bank and the importer:
The importer acknowledges the bank's vested interest in the goods.
The importer may have physical possession of the goods as trustee.
The importer is permitted to sell the goods and account to the bank for the sale proceeds.
The importer must insure the goods during the transaction process, noting the bank's vested interest within the insurance agreement.
NOTE:
Debts arising out of sale proceeds cannot be factored or sold by the importer without the specific approval of the bank.
-- U --
Undertaking
A written promise to deliver a security within the time specified. An undertaking is usually synonymous with the actual delivery of the security.
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 to have a"usance" (period of credit or term). The usance can begin from the date of the bill of lading or from"sight by the drawee" (the date of acceptance by the drawee) and is stated in days or months. This is an essential feature of acceptance credits and D/A collections.
-- W --
Waive
A drawer can waive the right to collect BC and/or interest charges under circumstances as set forth in ICC 522, Uniform Rules for Collections.
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US-FOREIGN-TRADE ZONE DEFINITIONS
Admit
To bring merchandise into a zone with zone status.
Audit-Inspection Procedures
These procedures provide the framework for Customs to eliminate the on-site supervision of zones, and for zone operators and users to increase zone operating flexibility.
Conditionally Admissible Merchandise
Merchandise which may be imported into the United States under certain conditions. Merchandise which is subject to permits or licenses, or which must be reconditioned to bring it into compliance with the laws administered by various Federal agencies.
Constructive Transfer
A legal fiction which permits acceptance of a Customs entry for merchandise in a zone before its physical transfer to the Customs territory. Constructive transfer is deemed to have occurred when Customs receives an entry in proper form. If the Entry is not accepted, it will be deemed constructively transferred back to the zone in its previous zone status.
Default
An action or omission that will result in a claim for duties, taxes, charges, or liquidated damages under the FTZ Operator’s bond.
Domestic Merchandise
Merchandise which has been produced in the United States and not exported therefrom; or merchandise imported into the United States and duty paid at the time of entry.
Domestic Status
Merchandise produced in the United States; and imported merchandise properly released from Customs custody on which all applicable duties and taxes have been paid.
Dutiable Value
The value of merchandise imported into the United States upon which duty is owed. For merchandise produced in a foreign-trade zone, the dutiable value is the sum of the value of the non-duty paid foreign material contained in the manufactured product. It does not include domestic value added in the zone.
Foreign Merchandise
Imported merchandise which has not been entered into the Customs territory of the United States. It may have privileged, non-privileged or zone restricted status.
Foreign-Trade Zones Board
The Foreign-Trade Zones Board is responsible for the oversight of the Foreign-Trade Zones program, including the issuance of grants of authority. The Board consists of the Secretary of Commerce and the Secretary of the Treasury.
Fungible Merchandise
Merchandise which for commercial purposes is identical and interchangeable in all situations.
Grantee
A corporation to which the privilege of establishing, operating, and maintaining a Foreign-Trade Zone has been granted by the Foreign-Trade Zones Board. The Grantee of Foreign-Trade Zone No. 233 is Dothan/Houston County Foreign Trade Zone, Inc.
Harmonized Tariff Schedule of the US (HTSUS)
The HTSUS is an international classification system of imported commodities that is used to determine the tariff that is assessed by the government for these commodities. A Harmonized Code is a specific classification for a specific type of commodity.
Merchandise
Merchandise includes goods, wares, and chattels of every description, except prohibited merchandise. For Dothan Warehouse, merchandise is referred to as item numbers or merchandise.
Mixed Status Merchandise
Foreign merchandise that has been combined with Domestic merchandise in the zone is sometimes referred to as Mixed Status merchandise.
Non-Privileged Foreign Status (NPF)
Foreign merchandise upon which the duty and applicable taxes will be determined at the time that the merchandise enters the Customs territory of the United States from the zone for consumption.
Operator
A corporation, partnership, or person that operates a zone or subzone under the terms of an agreement with the grantee. The operator of Foreign-Trade Zone No. 233 is the Dothan Warehouse.
Privileged Foreign Status (PF)
Foreign merchandise upon which the duty and applicable taxes have been determined at the time that this status is approved. The determined duty rate and taxes are not subject to future fluctuation. Once established, privileged foreign status cannot be changed. If merchandise has already been admitted to a zone with a non-privileged foreign status, privileged foreign status may be obtained by filing a CF214 and related documents. Application for this status, however, must be filed prior to manipulation or manufacture in the zone.
Prohibited Merchandise/Operations
Merchandise, the importation of which is prohibited by law on grounds of public policy or morals, or any merchandise which is excluded from a zone by order of the Foreign-Trade Zones Board. Books urging treason or insurrection against the U.S., obscene pictures. Also, certain operations involving the following merchandise are prohibited in zones: Tobacco, cigars, cigarettes and cigarette papers and tubes, firearms, distilled spirits, alcohol, wine and beer, sugar, watch movements and retail sales in a zone.
Restricted Merchandise/Operations
Merchandise which may not be authorized for delivery from Customs custody without a special permit, or a waiver thereof, by an agency of the U.S. government. Also the Foreign-Trade Zones Board has restricted certain operations involving the following products: steel, textiles, television tubes, sugar. The restrictions may vary on a case-by-case basis.
Subzone
A special purpose zone established as part of a zone project for a limited purpose, which cannot be accommodated within an existing zone facility. The term "zone" also applies to a subzone, unless otherwise specified.
Transfer
To take merchandise with zone status from a zone for consumption, transportation, exportation, warehousing, cartage, or lighterage, vessel supplies and equipment, admission to another zone and like purposes.
Unique Identifier Number
A number or identifier assigned to a specific type of material or merchandise admitted to the zone. FTZ Inventory is tracked by accumulating the admission and shipment quantities associated with this unique number over a range of shipments rather than by maintaining quantities of a variety of materials within a specific shipment. Inventory levels are adjusted on a First-In, First-Out (FIFO) or Foreign-First (FOFI) basis pursuant to generally accepted accounting principles. Merchandise associated with different admission shipments need not be physically segregated from other admissions. .
User
A person or firm using a zone for storage, handling or processing of merchandise.
Zone Lot Number
A collection of merchandise maintained under an inventory control method based on specific identification of merchandise admitted to a zone by lot and lot number. Use of this method requires use of uniquely and sequentially numbered lot files and the physical segregation and marking of lots.
Zone Restricted Status
Merchandise admitted to the zone for the sole purpose of exportation or destruction. Merchandise with zone restricted status may not enter U.S. Customs territory for consumption except when approved by the Foreign-Trade Zones Board.
Zone Site
The physical location of a zone or subzone.
Zone Status
The status of merchandise admitted to a Foreign-Trade Zone.
Zone Year
The Zone year is the fiscal year by which the Operator or User basis its inventory control reporting.
Glossary of terms
-- A --
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, (usually in exchange for documents of title to goods shipped on D/A terms) - see “Collections – Introduction”.
Acceptance Credit
A documentary credit which requires the beneficiary to draw a usance bill for subsequent acceptance by the issuing bank or the advising bank or any other bank as the credit stipulates - see “Documentary Credits”.
Accommodation Bill
In the context of fraud, a bill drawn without a genuine underlying commercial transaction.
Accountee
Another name for the applicant/opener of a documentary credit i.e. the importer = the person for whose account the transaction is made.
Advice of Fate
The collecting bank informs the remitting bank of:
a) non- payment/non-acceptance or
b) of D/A bill acceptance and the bill maturity date. (see"Handling Import Collections")
Advising
Conveying the terms and conditions of a DC to the beneficiary. The advising bank is the issuing bank's agent and is usually located in the beneficiary's country. (see"Export - DC Advising") The advising bank also takes reasonable care to verify the authenticity of the credit. (ICC UCC 500 Art 7).
Amendment
Any changes/amendments to the term of a DC must be initiated by the applicant and issued and advised to the beneficiary. If the credit is irrevocable the beneficiary has the right to refuse an amendment. (see"Amendments to DCs")
Applicant
Any party, usually the importer, who applies for a documentary credit.
Avalise
A bank's guarantee of payment of a B/E or promissory note by using the endorsement phrase"good per aval" on the note. Alternatively, the bank may issue a separate guarantee.
-- B --
Back-to-Back Credit
A credit issued on the security of an existing credit ("the master credit"). Payment of this credit will be contingent upon documents presented for the"master" credit. Each side of a B/B transaction covers the shipment of the same goods.
Beneficiary
a) A payee or recipient, usually of money.
b) A party in whose favor a documentary credit is established, usually the exporter.
Bill for Collection (BC)
Document(s) or check(s) submitted through a bank for collection of payment from the drawee.
Bill of Exchange (B/E)
B/E is synonymous with"draft". An unconditional order in writing, addressed by one person to another, signed by the person giving the order. The addressee is required to pay a certain sum of money to the order of a specified person or to bearer either on demand or at a fixed or determinable future time.
Bill of Lading (B/L)
A receipt for goods for shipment by sea. It is a Document of Title: see “Documents”.
Bill Receivable (BR)
Bills which are financed by the receiving branch, whether drawn under a DC or not, are treated as BRs by both the remitting branch and the receiving branches - see “Bills Receivable”.
Blank Endorsed
When a bill of lading is signed by the shipper and made out"to order" or"shipper's order" it is said to be blank endorsed. The bill of lading then becomes a bearer instrument. Any holder of a blank endorsed bill of lading can take delivery of goods from the shipping company.
-- C --
Carrier
Person or company whose business is the conveyance of goods e.g. shipping company
Case of Need
A principal may name an agent to whom the collecting bank may refer in specified circumstances. (see the sections on"Collections").
Chaser
Reminder sent by the collecting (or DC issuing) bank to the importer, repeating a request for payment - see “Handling Import Collections”.
Clean
a) A draft/check with no shipping documents. (see"Collections - Introduction")
b) A bill of lading without clauses that expressly declare a defective condition of the goods or the packing.
Clean Bill Purchased
A collection bill purchased with no shipping Purchase documents - see “Financing Export Collections”.
Clean Bill Receivable (CBR)
BR (Bill Receivable) with no shipping documents. The term is more often used for non-trade bills such as travelers checks.
Clean Collection
A draft with no documents Collection attached - see “Collections – Introduction”.
Clean Import Loan (CIL)
A loan granted to an importer for payment of import bills, without the Bank having any claim to the goods.
Collection Bank
The bank in the drawee's country that is instructed to collect payment from the drawee. (see"Collections - Introduction")
Collection Order
A form submitted by an exporter to the remitting/negotiating bank, accompanied by documents, and carrying the exporter's instructions. (see"Collections - Introduction")
Confirming
Assumption of the liability for payment, acceptance or negotiation of correctly presented documents under a DC. Only non-issuing banks can assume this liability. (see"Confirmation of DCs")
Consigment
Shipment of goods.
Consignee
The person/company/bank to whom the goods are delivered - usually the importer or the Collecting Bank - see “Handling Import Collections”.
Consignor
Synonymous with"shipper". The party who sends goods by ship, by land or air.
Contingent Liability
A liability that arises only under specified conditions, e.g. when a bank opens a DC it is liable to make payment only when the DC terms are fully met.
-- D --
DC Bills
Bills drawn under documentary credits.
Deferred Payment Credit (DPC)
Using stipulated documents, a bank can effect payment on a DC at a maturity date that is specified or determinable in the credit terms.
Demurrage
A charge made by a shipping company or a port authority for failure to load or remove goods within the time allowed.
Discounting
An accepted usance bill of exchange is sold at an amount less than its face value.
Discrepancy
Any deviation from the terms and conditions of a DC, or the documents presented thereunder, or any inconsistency between the documents themselves - see “Negotiation under DCs”.
Dishonor
Non-payment or non-acceptance.
Documentary Credit (DC)
A conditional undertaking by a bank to make payment, often abbreviated to “credit”. More precisely, it is a written undertaking by a bank (issuing bank) given to the seller (beneficiary) at the request of the buyer (applicant) to pay a sum of money against presentation of documents complying with the terms of the credit within a set time limit.
The United States is unique in using DOC CRED as the conventional abbreviation for Documentary Credit and D/C as the abbreviation for Documentary Collection.
Documents
The characteristics and importance of the various documents associated with Import/Export operations are explained and illustrated in “Deciding on Documents”.
Documents Against Acceptance (D/A)
Instruction for commercial documents to be released to the drawee on acceptance of the Bill of Exchange - see “Collections – Introduction”.
Documents Against Payment (D/P)
Instruction for documents to be released to the drawee only on payment - see “Collections – Introduction”.
Documents of Title
Documents that give their owner the right to the goods, i.e. Bill of Lading.
Draft
Bill of exchange issued by an exporter and submitted to his bank for collection, or under a DC. Shipping documents are usually attached to the draft/bill of exchange. (This is not to be confused with a"bankers' draft", which is sometimes used as a vehicle for reimbursement.)
Drawee
The drawee (usually the bank) pays the payee (usually the importer) on behalf of the drawer (usually the exporter) according to the terms of the draft that the bank has issued for the drawer. The drawer then presents payment to the drawee according to the terms of the collection order contained in the draft. (Example: In a typical checking transaction, the bank is the drawee of the check, the person writing the check is the drawer and the person to whom the check is written is the payee.)
Drawer
See"Drawee".
Due Date
Maturity date for payment
-- E --
Expiration Date
Latest date, usually in the country of the beneficiary, on which negotiation/payment of a DC can take place.
Export Line
Financing for exporters. (see"Financing Export Collections")
-- F --
Financed Bills
Bills sent on collection in which the remitting bank has a financial interest.
Foreign Bill Purchased (FBP)
A bill remitted to a correspondent bank in which the remitting bank 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. A customer could enter into a forward exchange contract for a DC payment or to sell the proceeds received from an export negotiation.
Freight
Goods OR the cost of transporting goods.
-- G --
General Average
A shipping industry term for a loss incurred by a sacrifice that has been made voluntarily or by 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
International Chamber of Commerce
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 of January 1, 1994.
ICC 522
Uniform Customs and Practice for Documentary Credits (1995 revision). Replaced the previous ICC 322 as of January 1, 1996.
Import License
A permit issued by the importing country's authorities for goods that are subject to import licensing restrictions.
Import Line
Finance facilities for importers covering documentary credits (DC), bills receivables (BR) and import loans (LAI).
Incoterms
Shipping Terms - see “Introduction to International Trade”.
Indemnity
Also known as a Letter of Guarantee (L/G). In a DC transaction, the credit applicant assumes liabiility for repayment of the credit to the negotiating bank if the latter cannot obtain reimbursement from the issuing bank. The applicant has"indemnified" the negotiating bank from any liability.
Inherent Vice
This refers to the propensity of a commodity to self-destruction which gives rise to a high insurance risk. Therefore, coverage is given only after payment of an additional premium (examples of this propensity are fruit which can rot and coal-dust which can ignite spontaneously).
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”.
Inward BC
A bill received by the import department of the collecting bank (IBC).
Irrevocable Credit
The issuing bank and the confirming bank (if any) undertake to honor a specified credit provided the terms of the credit are observed. The irrevocable credit may be communicated to the beneficiary by the advising bank and cannot be amended or canceled 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)
Out of date term for documentary credit. Avoid using it, as it now has other meanings.
Letter of Hypothecation
Loan-holders for goods imported on a collection basis must provide a letter of hypothecation, which is a promise to hold goods as security.
Loan Against Imports (LAI)
Loans granted to Imports customers for payment of bills, usually bills under our DCs.
-- M --
Marginal Deposit
Money held by the Bank to secure the opening of a DC. Normally no interest is paid on these deposits which are held in the Bank’s name whenever possible.
Master Credit
In back-to-back operations, the original export credit against which the second credit is opened
Maturity
Payment due date of a usance bill or promissory note.
-- N --
Negotiable/Non-Negotiable
Usually used with respect 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
a) The process of arriving at payment terms for draft credits that have been agreed to by the issuing bank. The credit may be confirmed, i.e. without recourse to the beneficiary or unconfirmed, i.e. with recourse to the beneficiary.
b) Purchase of an outward collection, thereby providing finance for the exporter.
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). Non DC bills are financed collections and DC bills are non-financed collections.
Non-Financed Bills
Bills sent on collection in which the remitting branch has no financial interest.
Noting
The first stage in protest of a dishonored bill: if instructed to protest for non-payment/non- acceptance, the collecting bank must send the bill to a notary public who will re-present 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)
When"To Order" is shown on Bills of Lading the shipper must endorse it"in blank", i.e. no named consignee. This turns the Bill of Lading into a bearer document and it becomes transferable by delivery.
Outward BC
Bill received for collection by the (OBC) Remitting Bank, handled by the Exports Department.
-- P --
Packing Credit
A loan for the purchase of 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
These are accidents or casualties of the sea. Ordinary actions of the winds and waves are not included. The term is invoked only when 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. A P/A is completed by back-to-back DC applicants to give the Bank authority to substitute invoices and to draw and issue drafts under the master DC if the customer fails to do so - see “Special DCs”.
Presentation
The act of requesting the importer's payment/acceptance of an import bill. (see"Handling Import Collections")
Presenting Bank
The bank that requests payment of a collection bill. This may be the collecting bank, its nominated branch or its local correspondent, whichever party is best located to contact the importer.
Principal
The initiator of a given transaction whose instructions are followed at all stages. In collection transactions the principal is generally the exporter. In other cases the principal may be the customer who opens 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 re-presentation of a dishonored 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 (representing the Bank) 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. Whether or not the drawer sues the drawee, the Bank retains recourse against the drawer & the drawee/endorser.
-- R --
Recourse
The right to claim a refund from another party who has handled a bill at an earlier stage. Ultimate recourse is to the exporter as drawer of the bill. The bank's right of recourse is covered in the TFGA signed by all import/export customers.
Red Clause Credit
A credit with a clause which authorizes the advising bank to make an advance payment to the beneficiary – “Special DCs”.
Reimbursing Bank
The bank that the DC-issuing bank has named to pay the value of the DC to the negotiating/paying bank.
Remitting Bank
a) Collection transactions: The exporter's bank, which remits the bill to the collecting bank.
b) DC transactions: The exporter's bank, which dispatches the documents to the issuing bank.
Retirement
To pay or settle an outstanding bill or import loan. Example: payment to the bank by the importer.
Revocable Credit
Credit that may be amended or canceled without notice to the beneficiary.
Revolving Credit
A credit that is automatically reinstated each time a draw takes place or upon receipt of authorization from the DC-issuing bank. The credit carries limits on duration and on the borrowing amount (cumulative or non-cumulative) involved for each draw. (see"Special DCs")
-- S --
Schedule
The remitting/negotiating bank's letter covering a bill sent to the collecting/issuing bank. The schedule lists the documents that are 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 the due date.
Shipment Date
A bill of lading evidences that goods have been received on board. Therefore the date that is entered on the B/L is considered to be the shipment date for documentary credit purposes.
Shipper
See consignor
Shipping Guarantee (SG)
Shipping guarantees enable customers to obtain goods before the arrival of the documents of title. The guarantees are issued to shipping companies who thereby agree to forward the bills of lading to the bank. If the customer does not hold a trust receipt, the Bank takes 100% cash margin against the value of the goods.
Note:
Within the context of a shipping guarantee, a bank is considered to be a dealer in goods as well as in documents.
Shipping Register
The register that lists all goods for which the imports department is handling documents, listed according to the ship carrying the goods. (see"Handling Import Collections")
Shipping Terms
See Incoterms
Sight
"Payable at sight" is synonymous with"payable on demand", i.e. payable upon presentation to the drawee.
Snags
Irregular bills, whether for import or export.
Standby Credit
Established as security for facilities granted at another branch or bank.
Status Report
Provides details of the creditworthiness and business background of traders and manufacturers. Status reports are produced by a bank's trade and credit information (TCI) department or by a credit information bureau.
Substitution
Prior to negotiation of the master credits in back-to-back and transferable credit operations, the prime beneficiary may substitute documents such as invoices and drafts.
-- T --
Technical D/A
A D/P transaction in which are bills purchased by the bank but it does not control the goods. Because of this the bill is accounted for as a D/A with 100% cash risk.
Examples:
When the buyer is the consignee for an airway bill, the bill of lading is sent directly to the buyer. When the buyer is the consignee for a parcel post receipt, the forwarder's cargo receipt is presented in place of the bill of lading.
Tenor
Term or Period of credit granted by the drawer. See Usance Bill.
Tracer
See “Chaser”.
Trade and Credit Information (TCI)
The bank department that provides details of the creditworthiness and business background of traders and manufacturers.
Trade Financing General Agreement (TFGA)
An agreement between the bank and all of its import and export customers that gives the bank recourse in all transactions. The TFGA was formerly known as the General Security Agreement.
Transferable Credit
Permits the beneficiary to transfer all or some of the rights and obligations of the credit to a second beneficiary or beneficiaries - see “Special DCs”.
Transferee
The second beneficiary or benefiaries of a transferable credit.
Transferor
The first/original beneficiary who originates a transferable credit.
Transit Interest
The amount of interest that is incurred on a DC from the date of negotiation to the date that the bank receives reimbursement. The calculation is made by the bank.
Trust Receipt (T/R)
A T/R is issued for a TFGA transaction and is based upon the terms of the TFGA. It describes the following terms of agreement between the bank and the importer:
The importer acknowledges the bank's vested interest in the goods.
The importer may have physical possession of the goods as trustee.
The importer is permitted to sell the goods and account to the bank for the sale proceeds.
The importer must insure the goods during the transaction process, noting the bank's vested interest within the insurance agreement.
NOTE:
Debts arising out of sale proceeds cannot be factored or sold by the importer without the specific approval of the bank.
-- U --
Undertaking
A written promise to deliver a security within the time specified. An undertaking is usually synonymous with the actual delivery of the security.
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 to have a"usance" (period of credit or term). The usance can begin from the date of the bill of lading or from"sight by the drawee" (the date of acceptance by the drawee) and is stated in days or months. This is an essential feature of acceptance credits and D/A collections.
-- W --
Waive
A drawer can waive the right to collect BC and/or interest charges under circumstances as set forth in ICC 522, Uniform Rules for Collections.
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US-FOREIGN-TRADE ZONE DEFINITIONS
Admit
To bring merchandise into a zone with zone status.
Audit-Inspection Procedures
These procedures provide the framework for Customs to eliminate the on-site supervision of zones, and for zone operators and users to increase zone operating flexibility.
Conditionally Admissible Merchandise
Merchandise which may be imported into the United States under certain conditions. Merchandise which is subject to permits or licenses, or which must be reconditioned to bring it into compliance with the laws administered by various Federal agencies.
Constructive Transfer
A legal fiction which permits acceptance of a Customs entry for merchandise in a zone before its physical transfer to the Customs territory. Constructive transfer is deemed to have occurred when Customs receives an entry in proper form. If the Entry is not accepted, it will be deemed constructively transferred back to the zone in its previous zone status.
Default
An action or omission that will result in a claim for duties, taxes, charges, or liquidated damages under the FTZ Operator’s bond.
Domestic Merchandise
Merchandise which has been produced in the United States and not exported therefrom; or merchandise imported into the United States and duty paid at the time of entry.
Domestic Status
Merchandise produced in the United States; and imported merchandise properly released from Customs custody on which all applicable duties and taxes have been paid.
Dutiable Value
The value of merchandise imported into the United States upon which duty is owed. For merchandise produced in a foreign-trade zone, the dutiable value is the sum of the value of the non-duty paid foreign material contained in the manufactured product. It does not include domestic value added in the zone.
Foreign Merchandise
Imported merchandise which has not been entered into the Customs territory of the United States. It may have privileged, non-privileged or zone restricted status.
Foreign-Trade Zones Board
The Foreign-Trade Zones Board is responsible for the oversight of the Foreign-Trade Zones program, including the issuance of grants of authority. The Board consists of the Secretary of Commerce and the Secretary of the Treasury.
Fungible Merchandise
Merchandise which for commercial purposes is identical and interchangeable in all situations.
Grantee
A corporation to which the privilege of establishing, operating, and maintaining a Foreign-Trade Zone has been granted by the Foreign-Trade Zones Board. The Grantee of Foreign-Trade Zone No. 233 is Dothan/Houston County Foreign Trade Zone, Inc.
Harmonized Tariff Schedule of the US (HTSUS)
The HTSUS is an international classification system of imported commodities that is used to determine the tariff that is assessed by the government for these commodities. A Harmonized Code is a specific classification for a specific type of commodity.
Merchandise
Merchandise includes goods, wares, and chattels of every description, except prohibited merchandise. For Dothan Warehouse, merchandise is referred to as item numbers or merchandise.
Mixed Status Merchandise
Foreign merchandise that has been combined with Domestic merchandise in the zone is sometimes referred to as Mixed Status merchandise.
Non-Privileged Foreign Status (NPF)
Foreign merchandise upon which the duty and applicable taxes will be determined at the time that the merchandise enters the Customs territory of the United States from the zone for consumption.
Operator
A corporation, partnership, or person that operates a zone or subzone under the terms of an agreement with the grantee. The operator of Foreign-Trade Zone No. 233 is the Dothan Warehouse.
Privileged Foreign Status (PF)
Foreign merchandise upon which the duty and applicable taxes have been determined at the time that this status is approved. The determined duty rate and taxes are not subject to future fluctuation. Once established, privileged foreign status cannot be changed. If merchandise has already been admitted to a zone with a non-privileged foreign status, privileged foreign status may be obtained by filing a CF214 and related documents. Application for this status, however, must be filed prior to manipulation or manufacture in the zone.
Prohibited Merchandise/Operations
Merchandise, the importation of which is prohibited by law on grounds of public policy or morals, or any merchandise which is excluded from a zone by order of the Foreign-Trade Zones Board. Books urging treason or insurrection against the U.S., obscene pictures. Also, certain operations involving the following merchandise are prohibited in zones: Tobacco, cigars, cigarettes and cigarette papers and tubes, firearms, distilled spirits, alcohol, wine and beer, sugar, watch movements and retail sales in a zone.
Restricted Merchandise/Operations
Merchandise which may not be authorized for delivery from Customs custody without a special permit, or a waiver thereof, by an agency of the U.S. government. Also the Foreign-Trade Zones Board has restricted certain operations involving the following products: steel, textiles, television tubes, sugar. The restrictions may vary on a case-by-case basis.
Subzone
A special purpose zone established as part of a zone project for a limited purpose, which cannot be accommodated within an existing zone facility. The term "zone" also applies to a subzone, unless otherwise specified.
Transfer
To take merchandise with zone status from a zone for consumption, transportation, exportation, warehousing, cartage, or lighterage, vessel supplies and equipment, admission to another zone and like purposes.
Unique Identifier Number
A number or identifier assigned to a specific type of material or merchandise admitted to the zone. FTZ Inventory is tracked by accumulating the admission and shipment quantities associated with this unique number over a range of shipments rather than by maintaining quantities of a variety of materials within a specific shipment. Inventory levels are adjusted on a First-In, First-Out (FIFO) or Foreign-First (FOFI) basis pursuant to generally accepted accounting principles. Merchandise associated with different admission shipments need not be physically segregated from other admissions. .
User
A person or firm using a zone for storage, handling or processing of merchandise.
Zone Lot Number
A collection of merchandise maintained under an inventory control method based on specific identification of merchandise admitted to a zone by lot and lot number. Use of this method requires use of uniquely and sequentially numbered lot files and the physical segregation and marking of lots.
Zone Restricted Status
Merchandise admitted to the zone for the sole purpose of exportation or destruction. Merchandise with zone restricted status may not enter U.S. Customs territory for consumption except when approved by the Foreign-Trade Zones Board.
Zone Site
The physical location of a zone or subzone.
Zone Status
The status of merchandise admitted to a Foreign-Trade Zone.
Zone Year
The Zone year is the fiscal year by which the Operator or User basis its inventory control reporting.
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