Glossary
is required to finance and administer a
project in its entirety and at its own risk.
The government may provide some form of
payment guarantee via long-term contracts,
but any residual value of the project accrues
to the private sector.
BOOT (Build-Own-Operate-Transfer) A
method of financing projects and developing
infrastructure whereby private investors
construct the project and own and operate
it for a set period of time (earning the
revenues from the project in this period), at
the end of which ownership is transferred
back to the public sector. The government
may provide some form of revenue
guarantee via long-term contracts.
BOT (Build-Operate-Transfer) Similar to a
BOOT project, but the private investors never
own the assets used to provide the project
services; however, they construct the project
and have the right to earn revenues from its
operation for a period of time. This structure
is used where the public nature of the project- for example, a road, bridge or tunnel –
makes it inappropriate for it to be owned
by a private-sector company and therefore
ownership remains with the public sector.
BRT (Build-Rent-Transfer) Similar to a BOT
or BLT project except that the project site,
buildings and equipment are rented to the
private sector during the term of the project.
Buying Agent An individual or company who
buys commodities or services on behalf of a
third party.
Capitalisation Cost (Cap Cost) The purchase
price of the leased asset. It also represents
the price at which a leasing company buys
the equipment from its supplier.
Capital Lease A type of lease that is
considered as an actual sale or purchase if:
a) ownership of the equipment is transferred
to the lessee at the end of the lease period;
b) the lessee gets a bargain purchase option
to be exercised at a specified option date;
c) the lease term is 75 percent of or longer
than the leased asset’s useful life; or d) the
net present value of the rental payments is
equal to at least 90 percent of the fair market
value. Also known as demise hire (USA).
Cargo Insurance An insurance policy taken
up to protect against loss of or damage to
goods while they are being transported.
Cash against Documents (CAD) A method of
payment for goods where an intermediary
transfers title documents to the buyer upon
payment in cash.
Cash Conversion Cycle A measurement of a
company’s efficiency in turning inputs into
cash, calculated from DIO, DPO and DSO.
Cash with Order A method of payment for
goods in which cash is paid at the time of
order and the transaction becomes binding
on both buyer and seller.
Cash Terms Trade terms in which the buyer
generally has a week to ten days to make
the payment.
Certificate of Acceptance A written
acknowledgement by the lessee of receipt
of the leased asset and acceptance of its
conditions, including it being in accordance
with specifications agreed before the
building or construction of said asset.
Certificate of Origin A document certifying
the country of origin of specific goods or
commodities, which, in certain circumstances,
is required prior to importation.
Certificate of Quality A document certifying the
quality of specific goods or commodities.
Certified Invoice Commercial invoice
containing certification of a specific aspect of
the contract (e.g. country of origin).
Charter Party A written contract between the
owner of a vessel and a ‘charterer’ who rents
use of the vessel or a part of its freight space.
Cheque A written order from one party (the
drawer) to another (the drawee, normally a
bank) requiring the drawee to pay a specified
sum on demand to the drawer or to a third
party specified by the drawer. Cheques
are widely used for settling debts and
withdrawing money from banks. See draft.
Clean Collection A collection involving only
financial documents with no commercial
documents.
Clean Draft A bill of exchange without any
shipping documents, the latter having been
sent directly to the buyer together with the
goods. This type of bill of exchange is mainly
used for services or for buyers with a good
standing. See documentary draft.
Collecting Agent The bank responsible
for sending documents to the overseas
correspondent and collecting the payment
due from the importer.