Glossary
guarantee issued by a state-affiliated agency
to enable funds to be raised to provide credit
to a buyer of goods in a foreign country.
Export Credit Insurance Insurance acting as
coverage against unforeseen losses caused
by a failure by a foreign buyer to pay a
supplier the funds owed for goods/services
provided.
Export Credit Schemes Managed and
operated by national export credit agencies,
export credit schemes are schemes set
up with the aim of promoting a country’s
exports, typically by providing insurance or
guarantees for export financing.
Export Finance Generic term for the financing/
funding of the export of commodities, goods
or services.
Export Licence A document issued by a
government authorising the licensee to
export specific goods.
Factor 1) A mercantile agent selling goods on
behalf of a third party. 2) A specialised entity
or bank that purchases trade receivables
at discount and also takes on the collection
process and, in some cases, the associated
risk when the factoring is ‘without recourse’.
Factoring A method of funding from the sale
or transfer (with or without recourse) of a
company’s accounts receivable to a third
party (a factor). See non-recourse factoring
and recourse factoring.
Fair Market Purchase Option An option given to
the lessee to buy the leased equipment at its
fair market value on the option date. Should
the lessee exercise the option, the title to the
asset is automatically transferred from the
lessor to the lessee. Not available in the UK.
Fair Market Rental The rental rate for a given
asset based upon the expected return for
equivalent assets under similar terms and
conditions in the open market.
Fair Market Value Lease A leasing agreement
under which the lessee has the option to
renew the contract at the asset’s fair market
value or to acquire it at the fair market value
at the end of the lease period.
Finance Fee A fee that is paid on a regular
interval by the lessee to the lessor for
leasing an asset. Also known as lease
charge or rental charge.
Financial/Finance Lease A capital lease that
serves to finance the acquisition of property/equipment. It is non-cancellable by either of
the contracting parties and constitutes a full
payout lease, i.e. the lessee has to insure
the equipment, pay the taxes and arrange
for its maintenance.
Fixed Interest Interest on loans that remains
at a fixed rate for the entire life of the
contracted debt.
Floating Interest Rate An interest rate on
loans (including debt securities) that is
modified regularly on the basis of an index
which varies frequently according to market
developments and conditions, e.g. LIBOR
and EURIBOR.
Forfaiting The purchase, at a discount and on
a without recourse basis, of medium-term
negotiable instruments by third parties that
are not involved in the original transaction.
Forwarding Agent An intermediary who
arranges for the carriage of goods and/or
associated services on behalf of a shipper or
the receiver.
Freight The consignment of goods to be
transported.
Freight Payments Specialised payment
services offered by banks and third parties
that effect payment on behalf of the client
directly to freight carriers.
Full Payout Lease A lease where the lessor
is eventually paid back the acquisition,
financing and overhead cost of a leased
asset as well as a return on investment.
Full Service Lease A leasing arrangement
where the lessor is responsible for the
maintenance of and cover of the property/
equipment that has been leased. Also known
as rental lease.
Gap (Gap Insurance) An insurance policy
taken out by the lessee in order to cover the
difference between the balance outstanding
on the lease and the market value of
the leased asset in the event of an early
termination through default or total loss.
Guarantee A statutory or contractual obligation
by a parent company or some other person
or entity to make interest, principal or
premium (if any) payments if the principal
debtor defaults on such payments.
Hire Purchase A hiring agreement with
an option for the hirer to purchase the
goods at the end of the hire period for a
nominal figure.