Glossary
title of the accounts receivable to a third
party (factor) where the latter can request
repayment from the seller if the debtor fails
to meet their payment obligation.
Recourse (Vendor Recourse) In a leasing
context, refers to the lessor’s right to return
assets to the manufacturer or distributor
in the event of a lessee defaulting on
payments. The manufacturer/distributor
may also be responsible for re-marketing
said assets.
Reimbursing Bank In a letter of credit, a
correspondent bank of the issuing bank that
is designated to make payments on behalf
of the issuing bank to the negotiating or
claiming bank.
Remitting Bank In a transaction involving a
documentary collection, refers to the bank
institution that is responsible for sending a
draft overseas for collection.
Renewal Option A provision in a lease contract
giving the lessee the opportunity to renew/
extend the contract on a specific option date
and at a predetermined rental rate. The
option date generally falls just prior to or at
the date of expiry.
Rentals The periodic payments required in
leasing agreements. Rentals can be fixed or
floating.
Reserve Tail Proven reserves available after
all the project’s funding is repaid.
Residual Sharing An agreement between
the lessor and another party to divide the
residual value of the lease between both
parties. If not carefully drawn up, such
arrangements may have negative tax
implications.
Residual Value The value of a leased asset
upon expiry of the lease contract.
Residual Value Insurance An insurance that
acts as coverage against an unforeseen loss
in value of leased property upon expiry of
the lease contract.
Revocable Letter of Credit A revocable letter
of credit can be amended or cancelled
at any time by the importer (unless
documents have already been taken up
by the nominated bank), without requiring
the exporter’s consent. Because revocable
letters of credit offer little protection to the
exporter, they are not often used.
Revolving Credit Facility A borrowingarrangement that provides the borrower
with a degree of flexibility by allowing
the borrower to draw and repay different
amounts for different periods throughout
the life of the credit facility. There is no
requirement for a revolver to be fully drawn.
Revolving Letter of Credit A letter of credit
in which the amount is renewed without
requiring any specific amendments to the
letter of credit. It is usually used where
regular shipments of the same goods or
commodities are made to the same importer.
Sea Waybill (SWB) Similar to a bill of lading
but without offering title of goods; it is used
for maritime transports. It allows the importer
to collect the goods against identification.
They are useful for companies that trade
internationally with themselves between
geographical areas where payment for
exports is not a problem.
Secondary Period Period following the primary
period of a finance lease.
Shipping Certificate Used by several futures
exchanges, a shipping certificate is a
negotiable instrument issued by exchange-
approved facilities that represents a
commitment by the facility to deliver the
commodity to the holder of the certificate
under the terms specified therein.
Shipside Bond / Shipside Bank Guarantee A
joint undertaking by an importer and its
bank issued in favour of the freight carrier
so as to allow delivery of goods prior to the
submission of the required original shipping
documents, such as the bill of lading,
invoice, etc.
Sight Draft A draft required to be paid upon
presentation.
Silent Confirmation The confirmation by a
bank of payment under a letter of credit that
is not disclosed to the letter of credit issuing
bank.
Special Purpose Vehicle (SPV) A private
company that has been set up with the
specific and sole objective of carrying out
a given project. Upon completion of the
project, it may also be contracted to provide
a service associated with the project to the
procuring entity.
Sponsor The developer of a project, who
normally supplies part or all of the equity
financing.