AVAL
An unconditional guarantee to pay a beneficiary.
BACK-TO-BACK LETTER OF CREDIT
Two Letters of Credit that help finance a single shipment. The process usually involved a middleman.
BENEFICIARY
The (legal) person to whom the credit is issued.
BUYER CREDIT
Financing that is extended to a buyer in order to enable payments to a supplier, and is usually available only for large export orders.
BRIDGE FINANCING
Also known as a Caveat Loan. This is a type of short-term loan that is in place in the period leading up to a longer-term financing agreement.
CARRIAGE AND INSURANCE PAID TO (CIP)
The seller delivers the goods to a carrier, at a mutually agreed place, and that the seller pays the freight and insurance charges to transport the goods.
CARRIAGE PAID TO (CPT)
The seller delivers the goods to a carrier, at a mutually agreed place, and that the seller pays the freight charges.
COUNTERTRADE
The exchange of goods or services for which money is not the only form of currency, but which are paid for, in whole or part, through the provision of other goods or services
CREDIT RISK
The risk associated with a borrower defaulting on a debt that may arise from failing to make the required payments.
DOWNPAYMENT
Also known as Initial Direct Payment, where the buyer pays the supplier before the contract enters into force.
FIXED RATE
The fixed interest rate over the specific period of the loan financing.
FLOATING RATE
Also known as Variable or Adjustable Rate. Any type of debt instrument that does not have a fixed rate of interest (plus a fixed margin).
FORCE MAJEURE
‘Superior Force’, events and circumstances over which none of the parties have control.
FORWARD PURCHASE
An agreement whereby the buyer’s goods are delivered to the exporter in advance.
FREE ALONGSIDE SHIP (FAS)
A seller delivers the goods within reach of the ship’s lifting tackle, and where the buyer bears all costs and risks of loss and damage.
FREE CARRIER (FCA)
A seller delivers the goods to a mutually agreed place, and where the buyer bears all responsibility for the contract of carriage.
FREE ON BOARD (FOB)
The seller delivers the goods to the ship, and where the buyer bears all costs and risks of loss and damage.
GREEN CLAUSE
A type of Letter of Credit, where exporters can draw a previously agreed percentage of the value of the goods to be shipped as collateral against presentation of warehouse receipts.
HEDGING
An investment that aims to reduce the risk of adverse foreign exchange movements.
INDEMNITY
Compensation, issued by a beneficiary to reimburse a settling bank if the applicant rejects the relevant documents.
LETTERS OF INDEMNITY
A guarantee that, in the case where contractual provisions are not met, financial penalties will come into play.
MATURITY / FINAL MATURITY
The date on which a debt instrument becomes due for payment. / The date on which the final payment is due.
MANAGEMENT FEE
Also known as Negotiation Fee, a one-off amount payable to lenders.
PRE-EXPORT FINANCE
Financing that takes place based on proven orders from buyers.
PRE-SHIPMENT RISK
An event that leads to a loss after the signing of a contract, but prior to the actual shipment of goods.
PROGRESS PAYMENT
Payments due from the buyer to the supplier during that may be financed under credit financing, during the contractual period.
PROMISSORY NOTE
Α document containing a written promise/obligation on behalf of the buyer to pay the seller on a specified date.
RED CLAUSE
A type of Letter of Credit, where the buyer extends an unsecured loan to a seller.
RESIDUAL RISK
The proportion of risk that is not guaranteed by a credit agency.
RETENTION BOND
A type of bond that acts as a guarantee to a buyer after the completion of a contract, even in the case that full payment has been made.
REVOCABLE (LETTER OF) CREDIT
A Letter of credit that can be unilaterally amended or cancelled by the issuing bank.
REVOLVING CREDIT
Credit that is renewed automatically after a specific period of time during which debts are gradually paid off.
STANDBY LETTER OF CREDIT
A guarantee of payment issued as “payment of last resort.
SUPPLIER CREDIT
Also known as Supplier Financing, this is an arrangement where the supplier accepts from the buyer deferred payment terms.
SWIFT
Society for Worldwide Interbank Financial Telecommunication.
TAKE-AND-PAY CONTRACT
A contract that contains an unconditional obligation on the buyer to pay even in the case when no goods or services have been provided by the supplier.
TRANSFER RISK
Also known as conversion risk, it is the risk associated with converting currency in which debt is denominated.
TRANSFERABLE CREDIT
An Import Letter of Credit that enables the beneficiary to transfer a specified amount of credit rights, with the agreement of the crediting institution, to third parties.
UNFAIR CALLING INSURANCE
Insurance that protects exporters in cases during which a bond or guarantee has been called unfairly.
WAREHOUSE RECEIPTS
Often used as a guarantee in countertrade transactions, these can be used as evidence that (physical) assets of a creditor are being held in storage.