The Role of Trade Finance in Working CapitalHolder in Due Course The party that receives
or acquires title to a cheque, bill of exchange
or promissory note.
House Bill of Lading A bill of lading issued
by a freight forwarder rather than by the
carrier. Freight forwarders will normally have
possession of the bills of lading issued by
the carriers, and will then issue their own
bills of lading to cover the various goods that
make up the total shipment.
Import Licence A document issued by the
government that authorises the licensee to
import (usually specific) commodities, goods
or services.
Import Quota A restriction imposed by a
government on the total volume or value of
an import.
Incoterms (Incoterms 2010) International
standard trade definitions developed
and promoted by the ICC (International
Chamber of Commerce) to facilitate
international trade.
In-house Factoring Centres The centralisation
of trade receivables within an organisation
so as to optimise the collection process.
Insurance Certificate Written evidence,
supplied by the exporter or freight forwarder,
that the exported goods are insured for
transport. The certificate will cross-reference
a master insurance policy.
Internal Factoring The sale or transfer of
the title of the accounts receivable from
an exporting company to an affiliate or
subsidiary who collects from an importing
subsidiary.
Invoice Discounting A method of funding for a
company when it sells outstanding invoices
to a finance house unbeknown to the debtor.
Irrevocable Letter of Credit A letter of credit
that once issued can only be cancelled
with the consent of all parties to the credit,
including the beneficiary.
Irrevocable and Unconditional Transfer A
transfer which cannot be revoked by the
transferor and which is final.
Issuing Bank The bank issuing a letter of credit
(L/C). It is obliged to pay if the documents
stipulated in the L/C are presented.
Lease A contract according to which the owner
of an asset (the lessor) offers the right to
use the asset to another party (the lessee)
during a certain period. In return for this, the
lessee has to make regular rental payments
at predetermined rates to the lessor.
Lease Line A lease line functions in the same
way as a bank line of credit. It permits the
lessee to add assets to the existing lease
agreement without having to enter into a
new contract or negotiate new terms and
conditions.
Lease Purchase A full-payout lease with a
lease term related to the underlying asset’s
estimated useful life and where title of the
asset is passed to the lessee at the end of
the lease on payment of a nominal figure.
Lease Rate The rate on periodic rental
payments made by the lessee for the use of
the leased equipment.
Lease Schedule A schedule underlying a
master lease agreement and providing
detailed information on the contract terms,
including rental payments and rights with
regard to the use of the leased asset.
Lease Term The length of a lease agreement
and the (minimum) period during which
the lessee has the right to use the leased
asset and has to make rental payments on a
regular basis. Also known as base term.
Legalised Invoice A commercial invoice that
has received the legal endorsement from
the importer’s country. This is usually done
via the diplomatic representative of the
importer’s country in the exporter’s country.
Lessee The party in a lease contract which
is given the right to use and to possess an
asset owned by the leasing company for a
specified period in exchange for periodic
rental payments.
Lessor The legal owner of the asset leased to
the lessee for a specified period. The lessor
may also be a leasing company that buys
the equipment and rents or leases it to other
parties. The lessor offers the lessee the right
to use the property during the lease term.
Letter of Credit (L/C) A promissory document
issued by a bank to a third party to make
a payment on behalf of a customer in
accordance with specified conditions.
Letters of credit are frequently used in
international trade to provide a secure way
for an exporter to receive payment from
an importer via the importer’s bank. L/Cs
can also be issued by companies, but this
is rare.