Glossary
certain acts (such as charging it assets or
incurring further indebtedness beyond an
agreed limit) and to meet agreed financial
covenants.
Credit Analysis The analysis of a company’s
performance, financial standing and future
prospects with the objective of determining
whether it will be able to fulfil its present and
proposed contractual obligations.
Credit Check The in-depth analysis of
companies to determine their ability to fulfil
their payment obligations.
Credit Facility (or Line of Credit) A short or
long-term borrowing arrangement provided
by a bank which may be committed or
uncommitted.
Credit Insurance Coverage against unforeseen
losses caused by a failure of a debtor to pay
a creditor the funds owed for goods/services
provided on credit.
Creditor Individual or legal entity that is owed
money by another individual or entity,
following the granting of a loan or credit by
the former to the latter.
Cross-guarantees A series of guarantees
issued by two or more parties in favour
of the same person or entity in which the
guarantor(s) guarantee(s) the obligations of
the other guarantor(s) in the event that one
of the other guarantor(s) is unable to meet
their obligation(s) under their guarantee(s).
Currency Adjustment Factor (CAF) A freight
surcharge levied to offset fluctuations in
foreign currency values.
Customs The governmental authorities
responsible for supervising imports and
collecting tariffs.
Customs Invoice A document required by
some foreign countries’ customs officials
to verify the value, quantity and nature of
the shipment, describing the shipment of
goods and showing information such as
the consignor, consignee and value of the
shipment.
Days Billing Outstanding (DBO) See days
sales outstanding (DSO).
Days Inventory Outstanding (DIO) A
measurement of the efficiency of a
company’s production process calculated
by dividing the average inventory over a
time period by the total cost of goods sold
in the period.Days Payable Outstanding (DPO) A
measurement of the time a company takes
to pay its suppliers calculated by dividing
the average accounts payable over a time
period by the total cost of goods purchased
in the period.
Days Sales Outstanding (DSO) A credit
measurement ratio calculated by dividing
accounts receivable outstanding at the end
of time period by the average daily credit
sales for the period. Also known as days
billing outstanding (DBO).
Debtor Individual or legal entity that owes
money to another individual or entity
following the granting of a loan or credit by
the latter to the former.
Defeased Leasing A leasing contract that
includes a condition which protects the
lessor from any risk resulting from the
failure of the lessee to meet its contractual
obligations.
Delivery against Acceptance A method of
documentary collection which allows a buyer
to defer payment as shipping documents are
exchanged for an acceptance.
Delivery against Payment A method of
documentary collection which requires
shipping documents to be exchanged for
payment.
Delivery and Acceptance See certificate of
acceptance.
Delivery Order A document from the consignee,
shipper or owner of freight ordering the
release of freight to another party.
Demand Guarantee Defined by the
International Chamber of Commerce (ICC)
as an irrevocable undertaking, issued by
the guarantor upon the instructions of the
principal, to pay the beneficiary any sum
that may be demanded by that beneficiary
up to a maximum amount determined in the
guarantee, upon presentation of a demand
conforming with the terms of the guarantee.
Discounted Bills of Exchange Bills not yet due
that are sold, usually by a company to a
bank, for an amount less than the face value
of the bill.
Documentary Collection An international
payment method in which the exporter sends
documents concerning a shipment through
banking channels with the instructions to
release them to the buyer only upon receipt