Cambodian Investment Glossary

Advance Against Documents (AAD): A loan made on the security of the actual documents covering a shipment.

Advance payment: Trading method in which the buyer pays for the goods before they are
dispatched. This is used where the buyer is of unknown credit worthiness and is
unable to obtain a letter of credit. This is also used as a matter of convenience for small orders.

Advising bank: Bank, usually in the seller's country, whose primary function is to
authenticate the letter of credit and advise it to the seller. The advising bank MAY also take on other roles in the transaction. These include:

confirming the letter of credit (confirming bank)
accepting a term bill of exchange (accepting bank)
paying the seller upon presentation of documents (paying or negotiating
bank)

Adviory Capacity: Used to indicate that a shipper's agent or agent or reprentative is not empowered to make definitive changes or adjustments without approval of the group or individual represented.

Air way bill: Transport document used in air freight. Serves as a receipt for the goods and
evidence of carriage contract. This is not a document of title and so is not needed by the consignee in order to claim the goods from the carrier.

All risks insurance: Insurance covering risks set out in the Institute of London Underwriters Cargo Clauses A. Covers fire, theft, loss at sea, damage during loading, transhipment and discharge but NOT strikes, riots, civil commotion or war piracy.

Alongside: The side of a ship. Goods to be delivered "alongside" are to be placed on the dock or taken next to the ship within reach of the transport ship's tackle so that can be loaded aboard the ship.

Amendment: Variation in the terms or conditions of any document. In the case of Letters of credit, an amendment to a letter of credit is issued by the Issuing bank under the
direction of the applicant, and is advised to the Advising bank, following the
same route as the original LC.

APEC: Asia Pacific Economic Cooperation, an organization of countries in Asia and elsewhere dedicated to increasing international trade.

Applicant: Buyer/importer in a letter of credit transaction, who applies to the Issuing
Bank for a letter of credit in favor of the seller (beneficiary). Other terms for this are, the accountee or accreditor.

Arbitage: The process of buying foreign exchange, stocks, bonds, and other commoditiies in one market and immediately selling them in another market at hopefully higher prices.

ASEAN: The Association of South East Asian Nations, a regional organization of Southeast Asian countries.

Asian Dollars: US funds deposited in banks in Asia and the Pacific Basin.

Assignment: A transfer of legal rights under an agreement. In the case of letters of credit, a banking arrangement between the beneficiary of a letter of credit and a
third party - usually the supplier of the goods - who requires an assurance of
payment. Usually takes the form of a letter or deed of assignment. The beneficiary of the credit is the assignor; part of the proceeds of the credit are irrevocably assigned to the assignee.

Avalisation: Payment undertaking given by a bank in respect of a bill of exchange drawn
on a buyer. A way of giving security to the drawer of a term bill. The bill is stamped with wording such as 'Pour aval' and signed by a representative of the bank.

Balance of Trade: The difference between a country's total imports and exports; if exports exceed imports, a favorable balance of trade exists; if not, a trade deficit is said to exist.

Bank guarantee: Undertaking given by a bank on behalf of a customer to pay the guaranteed party a sum of money if the customer cannot or will not pay. This should not be confused with the payment undertaking given under a letter of credit.

Bargain Purchase Option: A lease provision allowing the lessee, at its option, to purchase the equipment for a price predetermined at lease inception, that is substantially lower than the expected fair market value at the date the option can be exercised.

Barter:Trade in which merchandise is exchanged directly for other merchandise without the use of money. Barter is the oldest form of trade and is currently widely in use in trade with countries using currency that is not readily convertible on world exchange markets.

Beneficiary: a party who receives a legal benefit. In a letter of credit situation, the party to whom payment will be made. Normally, but not always, the seller or exporter.

Big Emerging Markets: A group of fast growing economies identified by the Department of Commerce as having the most potential for US exporters. They are: The Chinese Economic Area (China, Hong Kong and Taiwan), India, Indonesia, South Korea, Argentina, Brazil, Mexico, Poland, Turkey and South Africa.

Big-Ticket: A market segment of leasing, sales, etc for items costing over $2 million. In leasing, this sector is generally dominated by leveraged leases, represented by lease financing over $2 million.

Bill of exchange: The most commonly-used financial instrument in international trade.
An unconditional payment demand for a specific sum of money, payable
either at sight or at a specified future date. This is drawn up by the seller and presented to the buyer. This is sometimes called “the draft.”

Bill of Lading: Transport document issued by the carrier or a document establishing the terms of a contract between a shipper and a transportation company under which the freight is to be moved between specific points for a specified charge.

An ocean shipment requires two documents: an Inland Bill of Lading to cover the domestic movement of the cargo, and an Ocean Bill of Lading to cover the international carriage; an Air Way Bill is essentially a through Bill of Lading for an air cargo shipment, domestic and/or international.

Bonded Warehouse - a warehouse authorized for storage of good on which payment of duty is deferred until the goods are removed from the warehouse.

Broker: A company or person who arranges, for a fee, purchase or sales or transactions between lessees and lessors of an asset.

Capital Lease: Type of lease classified and accounted for by a lessee as a purchase and by the lessor as a sale or financing, if it meets any one of the following criteria: (a) the lessor transfers ownership to the lessee at the end of the lease term; (b) the lease contains an option to purchase the asset at a bargain price; (c) the lease term is equal to 75 percent or more of the estimated economic life of the property (exceptions for used property leased toward the end of its useful life); or (d) the present value of minimum lease rental payments is equal to 90 percent or more of the fair market value of the leased asset less related investment tax credits retained by the lessor. (Also see finance lease.)

Carnet: A Customs document permitting the holder to carry or send merchandise temporarily into certain foreign countries for display, demonstration, or other purposes without paying import duties or posting bonds.

Carrier: The party responsible for transport of goods (shipping line, airline, road haulage
company etc.)

Carriage and insurance paid (CIP): Incoterm for all transport modes.
Exporter:

Case of need: In a collection, party in the buyer's country who is designated by the seller to advise and/or give instructions in the event of problems or disputes. The
collection order will specify whether the case of need is authorised to instruct
the bank.

Cash Against Documents (CAD): Payment for goods in which a commission house or other intermediary transfers title documents to the buyer upon payment in cash.

Cash cover: In a letter of credit transaction, money deposited by the applicant with the
Issuing bank.

Cash in Advance (CIA): Payment for goods in which the price is paid in full before the shipment is made. This type of payment is usually only made for very small shipments or when goods are made in order.

Certificate of Acceptance: Term used in leasing. A document whereby the lessee acknowledges that the equipment to be leased has been delivered, is acceptable, and has been manufactured or constructed according to specifications.

Certificate of analysis/certificate of inspection: Documents that may be asked for by the importer and/or the authorities of the importing country, as evidence of quality or conformity to specifications.

Certiciate of manufacture: A statement which is usually notarized in which the producer of goods certifies that the goods have been produced and are now available to the buyer.

Certificate of origin: Documents that may be asked for by the authorities of the importing country, as evidence of the country of manufacture of the goods and hence
qualification for preferential tariffs etc.

CFR - Cost and Freight : A pricing term that indicates that the cost of the goods and freight charges are included in the quoted price.

Charter party bill of lading: Bill of lading issued by the charterer or hirer of a vessel. Unpopular with banks, because situations can arise when the owner of the vessel has a
claim on the goods.

CIF - Cost, Insurance, freight : a pricing term indicating that the cost of the goods, insurance, and freight are included in the quoted price.

Clean collection: Collection in which only the financial document (bill of exchange) is sent through the banks.

Clean bill of lading: a receipt for goods issued by a carrier that indicates that the goods were received in apparently good order and without damage.

Collecting bank: Bank in the buyer's country that participates in a collection. The collecting bank may or may not also be the presenting bank, who presents documents
to the buyer and claims payment.

Collection: Trading method in which the banking system acts on behalf of the seller,
presenting documents to the buyer and only releasing them upon payment
(or upon acceptance of a term bill).

Collection order: In a collection, the document in which the seller instructs the banks as to how the collection is to be conducted.

Combined transport bill of lading: Transport document, widely used for containerized shipments, covering more than one transport mode - for example, rail and sea. Has the same general characteristics as a marine Bill of Lading.

Commercial document: General term for documents describing various aspects of a transaction, e.g. commercial invoice, transport document, insurance document, certificate of origin, certificate of inspection etc.

Commercial invoice: Document drawn up by the seller that gives a summary of the commercial transaction (goods supplied, price, means of shipment and so on).

Commitment fee: This term has several meanings. It is the fee charged by a forfeiter for reserving funds to a transaction that was forfeited. It is the fee charged by a negotiating bank for waiving recourse to the beneficiary in the event of non-payment by the Issuing bank.

Common Carrier - An organization that transports persons or goods for a fee.

Compliant documents: Documents presented under a letter of credit that comply with all its terms and conditions. The banks are only obliged to pay the beneficiary if
documents are totally compliant.

Confirmed letter of credit: Letter of credit in which a bank (usually) in the seller's country adds its own payment undertaking to that of the Issuing bank. Protects against country
risk and bank risk as well as customer credit risk.

Confirming bank: Bank that adds its payment undertaking to a letter of credit.
Also see confirmed letter of credit.

Consignment: Delivery of merchandise from an exporter to an agent under agreement that the agent sell the merchandise for the account of the exporter. The consignor retains title to the goods until the consigneee has sold them. The consignee sells the goods, collects the commission due and remits the net proceeds to the consignor.

Constructive control: The ability to retain control over goods dispatched to the buyer. Usually maintained through transport documents. Where there is credit risk,
constructive control is important to the seller. Constructive control may also
be important to a bank who has financed a transaction.

Consular invoice: Commercial invoice prepared in the seller's country by the consulate of the buyer's country. Helps the government of the buyer's country control and
regulate imports.

Convertible currency: A currency that can be bought and sold for other currencies at will.

Copyright: The exclusive right to reproduce, publish and sell printed materials, musical work, and art.

Correspondent bank: Overseas bank with whom a bank account has relationships (nostro-vostro accounts) and arrangements for authentication of communications.

Cost and freight (CFR): Incoterm. Seller pays transport costs to named destination, but not insurance.

Cost, insurance and freight (CIF): Incoterm. Seller pays transport costs and insurance to named destination.

Counter trade: The sale of goods or services that are paid for in whole or part by the transfer of goods or services from a foreign country.

Countervailing Duties: Duties levied on an imported good that has been unfairly subsidized by a foreign government. Imposing duties on the good is meant to raise the product's price to a "fair market value".

Country risk: Risk that economic or political instability in the buyer's country will interfere with the buyer's ability to pay for goods supplied.

Cover note: Insurance document evidencing that insurance cover for a consignment has been taken out, but not giving full details.

Credit Risk Insurance: Insurance that covers the risk of nonpayment for delivered goods.

Currency option: Foreign exchange transaction in which a party buys the right (but not the obligation) to buy or sell a given amount of foreign currency at a given exchange rate at either: a given future date or at any point within a future time period.

Customs: The government authorities designated to collect duties levied by a country on imports and exports. The term also applies to the procedures involved in such a collection.

Customhouse Broker: An individual or company licensed by the government to enter and clear good through customs.

Deed of Assignment: A banking arrangement between the beneficiary of a letter of credit and a third party - usually the supplier of the goods - who requires an assurance of
payment. The beneficiary of the credit is the assignor: part of the proceeds of the
credit are irrevocably assigned to the assignee.

Deed of protest: Document evidencing that a protest has been carried out.
In a collection, a bank may be asked to do this if a bill of exchange is not
paid, accepted or honored at maturity.

Deferred Payment Credit: A type of letter of credit which provides for payment some time after presentation of the shipping documents by the exporter (i.e. x days after sight).

Demurrage: Charges made for storing goods at the port of destination while awaiting
collection by the buyer. These may be incurred unintentionally if the goods arrive before the buyer has received the document of title.

Devaluation: The official lowering of the value of one country's currency in terms of one or more foreign currencies.

Direct Financing Lease(Direct Lease): A non-leveraged lease by a lessor (not a manufacturer or dealer) in which the lease meets any of the definitional criteria of a capital lease, plus certain additional criteria.

Discounting of bills: Where the payee of a term bill requires payment immediately, a bank may discount the bill, i.e. make immediate payment, deducting an amount for
interest over the term of the bill.

Dispatch: An amount paid by a vessel's operator to a charter if loading or unloading is completed in less time than stipulated in the charter party.

Distributor: A foreign agent who sells for a supplier directly and most often collects all payments from customers and maintains an inventory of the supplier's products.

Dock receipt: A receipt issued by an ocean carrier to acknowledge receipt of a shipment at the carrier's dock or warehouse.

Dock Statement: A receipt issued by an ocean carrier to acknowledge the receipt of a shipment at the carrier's dock or warehouse facilities.

Document of title: A transport document (usually a bill of lading) which (when appropriately made out) entitles the bearer to claim the goods from the carrier.

Documentary collection: Procedure in which banks in the buyer's and seller's country act for the seller by presenting commercial documents to the buyer along with a payment
demand (usually a bill of exchange).

Documentary credit: sometimes used as another name for a letter of credit.

Drawee: Party on whom a bill of exchange is drawn, i.e. who is required to make
payment. In the context of collections, usually the buyer. In letters of credit, the drawee is usually a bank.

Drawer: Party drawing up the bill of exchange. Usually also the payee, to whom the
money is due. Often used to designate the 'seller'.

Dumping: Exporting/importing merchandise into a country below the domestic price or the costs incurred in production and shipment.

Duty: A tax on imports imposed by the customs authority of a country. Duties are generally based on the value of the product being imported (ad valorem), weight, or quantity (specific duties), or a combination of value and other factors (compound duties). Also known as a tariff.

Economic Life(Useful Life): The period of time during which an asset will have economic value and be usable.

Effective Lease Rate: The effective rate (to the lessee) of cash flows resulting from a lease transaction. To compare this rate with a loan interest rate, a company must include in the cash flows any effect the transactions have on federal tax liabilities.

Endorsement: Signing on the back of a document so as to assign a right or benefit to
another party. Endorsement by the seller may be necessary for transport documents, insurance documents, bills of exchange or many other documents.

Engagement: The assumption of payment responsibility in respect of a letter of credit, e.g.
when an Advising bank agrees to add its confirmation to a credit.

Equity Participant: The owner participant, trustor owner, or grantor owner.

Equipment Schedule: A document that describes in detail the equipment being leased or purchased. For a lease, it may also state the lease term, commencement date, repayment schedule and location of the equipment.

Euro Dollars: US funds deposited in banks outside the United States. This usually means banks in Europe or the European Union.

Euro: The single currency of the European Economic and Monetary Union (EMU) introduced in January 1999. EMU members are Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands, Portugal, and Spain.

Exchange permit: A government permit sometimes required by the importer's government to enable the import firm to convert its own country's currency into foreigh currency .

Ex-works (EXW): Buyer bears all costs and assumes all risks for the consignment once it has left the seller's premises.

Expiry date: The date when a letter of credit is no longer valid - i.e. the date beyond which it cannot be used.

Export Broker: An individual or firm that brings buyers and sellers together for a fee, but does not rake part in the actual sales transaction.

Export Management Company (EMC): A private firm that transacts export business on behalf of its client companies in return for a commission, salary, or retainer.

Export License: A general export license covers the exportation of goods not restricted under the terms of a validated export license. No formal application or written authorization is needed to ship exports under a general export license.

Export Subsidies: Any form of government payment that helps an exporter or manufacturing concern to lower its export costs.

Fair Market Purchase Option: An option to purchase leased property at the end of the lease term at its then fair market value. The lessor does not have the ability to retain title to the equipment if the lessee chooses to exercise the purchase option.

Fast Track Negotiating: Authority provided by the U.S. Congress to the Executive Branch to negotiate amendment-proof trade agreements.

Finance Lease (See Single Investor Lease): Typically, a finance lease is a full-payout, noncancellable agreement, in which the lessee is responsible for maintenance, taxes, and insurance.

Financial document: a document relating to payment. The bill of exchange is the financial document most commonly used in collections and letters of credit. Promissory notes are also sometimes used in collections.

Fixed forward contract: Currency is bought or sold at a given future date.

Force majeure: The title of a standard clause in a marine contract exempting the parties for nonfulfillment of their obligations as a result of conditions beyond their control - such as floods, war, etc.

Foreign Equity Requirements: Investment rules that limit foreign ownership to a minority holding is a company.

Foreign Trade Zone: Also known as Free Trade Zones, or FTZs, they are ports designated by the government of a country for the duty-free entry of non-prohibited goods. Merchandise may be stored, displayed, assembled, packaged, or used for manufacture within the zone and re-exported without duties being levied.

Forward contract: A contract for the sale or purchase of a given amount of foreign currency at a future time at a rate of exchange that is fixed when the contract is made.

Forward option contract: Currency must be bought or sold within a given period of time.

Foul Bill of Lading: A receipt for goods issued by a carrier with the indication that the goods were damaged when received from the shipper.

Free Alongside Ship(FAS): This is an incoterm whereby the exporter and importer have the following relationship:

Free On board (FOB): An Incoterm whereby the seller pays for loading the items to be purchased onto the vessel, but not for the cost of carriage or insurance.

Free Port: An area such as a port city into which merchandise may legally be moved without payment of duties.

Free-trade zone: A port designated by the government of a country for duty-free entry on any non-prohibited good. Merchandise may be stored, used or manufactured in the zone and reexported without duties being paid.

Freight Forwarders' Receipt: Transport document issued by Freight Forwarder. Not a document of title.

Full Payout Lease: A lease in which the lessor recovers, through the lease payments, all costs incurred in the lease plus an acceptable rate of return, without any reliance upon the leased equipment's future residual value.

G-7(Group of Seven): Seven industrial countries - the US, Japan, Germany, France, The United Kingdom, Italy and Canada - whose leaders have met at annual economic summits since 1975 to coordinate economic policies.

GATT: The Generalized Agreement on tariffs and Trade, a multilateral treaty designed to help reduce trade barriers between the signatory countries and to promote trade through tariff concessions.

General export license: A type of export license for which individually validated export licenses are not required. No individual authorization is needed to ship exports under a general export license.

Generalized System of Preferences (GSP): A. U.S. program that grants duty-free treatment, on a product-by-product basis, to developing countries. This program is intended to help developing nations start selling to U.S. markets.

Gross Domestic Product (GDP) - A measure of the market value of goods and services produced by a nation. Unlike Gross National Product, GDP excludes profits made by U.S. firms overseas, as well as the share of reinvested earning in U.S. firms' foreign-based operations.

Gross weight: The total weight of a shipment, including goods and packing.

Guideline Lease: A lease written under criteria established by the IRS to determine the availability of tax benefits to the lessor.

Harmonized Systems: A globally developed schedule of tariff nomenclature arranged in six-digit codes so that all participating countries can classify traded goods on a common basis. Beyond the six digit level, countries are free to introduce national distinctions for tariff and statistical purposes. The U.S. adaptation of this system is the Harmonized Tariff Scheduled of the United States.

Import Licenses: Licenses required by some countries to bring in a foreign-made good. In many cases, import licenses are also used by the issuing country to control the quantity of imported items.

Incoterms: International commercial terms used nearly universally in letters of credit, international contracts and other documents. These include who pays for carriage, loading, unloading, insurance, duties etc. The common Incoterms are CIF, FOB, CFR, and Ex Works. They are compiled and published by the International chamber of Commerce (212.206.1150).

Indeminity Clause: A clause in which the one party indemnifies the other. In leasing, generally a clause whereby the lessee indemnifies the lessor from loss of tax benefits.

Indenture of Trust: (Indenture) An agreement between the owner trustee and the indenture trustee: The owner trustee mortgages the equipment and assigns the lease and rental payments under the lease as security for amounts due to the lenders. Same as a security agreement or mortgage.

Inland bill of lading: A bill of lading used in transporting good overland to the exporter's international carrier.

Institute Cargo Clauses: Standard conditions of insurance cover for goods, established by the Institute of London Underwriters. This is also referred to as clauses A, B and C.

Insurance certificate:Document giving details of insurance cover for a consignment.
The certificate will cross-reference a master insurance policy and must be
countersigned.

Insurance cover note:- Insurance document evidencing that insurance cover for a consignment has been taken out, but not giving full details.

Insurance policy: Document setting out full details of insurance in force. A policy MAY refer to a single consignment and be sent with the other commercial documents. More commonly there is an open policy for all the shipper's consignments. For each consignment an insurance certificate is issued, cross-referencing the policy.

Intellectual Property: Intangible items protected by patents, trademarks and copyrights, such as creative works and inventions. There are international organizations that deal solely with intellectual property, and increased protection of intellectual property, and increased protection of intellectual properly rights is an issue of discussion in GATT, WTO and other talks.

Intermodal:The use of two or more modes of transportation to complete a cargo move; truck/rail/ship, or truck/air, for example.

International Chamber of Commerce: International non-governmental body concerned with promotion of trade and harmonisation of trading practice. Responsible for drafting and publishing:

Inward collection: How a Collecting or Presenting bank will refer to a collection.
The collection that has been received from an overseas bank or exporter for
presentation to a buyer in this country for payment.

Inward letter of credit: How an Advising or Confirming bank will refer to a letter of credit. A letter of credit issued by an overseas bank for advice to a seller in this
country.

Irrevocable Letter of Credit: A letter of credit in which the specified payment is guaranteed by the bank if all terms and conditions are met by the drawee. The opposite of a revocable letter of credit, which can be canceled or altered by the drawee, or buyer, after it has been issued by the drawee's bank. Under UCP 500 all credits are irrevocable unless explicitly
stated to be revocable.

Issuing bank: Bank giving the primary payment undertaking for a letter of credit, acting on
behalf of a buyer.

Joint venture: An international business collaboration between foreign interests and private parties from the host country, in which two or more parties establish a new business enterprise to which each contributes and in which ownership and control are shared.

Lease: A contract in which one party conveys the use of an asset to another party for a specific period of time at a predetermined rate.

Lease Rate: (Rental Payment) The periodic rental payment to a lessor for the use of assets. Others may define lease rate as the implicit interest rate in minimum lease payments.

Lessor: The party to a lease agreement who has legal or tax title to the equipment, grants the lessee the right to use the equipment for the lease term, and is entitled to the rentals.

Latest shipment date: Date on a letter of credit by which the goods must have been shipped. When the Letter of Credit is presented, this date will be checked against the date on the transport document.

Letter of Credit: A document issued by a bank per instructions from a buyer of goods, authorizing the seller to draw a specified amount of money under specified terms, usually the receipt by the bank of certain documents with a given time.

Leveraged Lease: In this type of lease, the lessor provides an equity portion (usually 20 to 40 percent) of the equipment cost and lenders provide the balance on a nonrecourse debt basis. The lessor receives the tax benefits of ownership.

Licensing: A business arrangement in which the manufacturer of a product (or a firm controlling a technology or product) grants permission to some other group, individual or corporation to manufacture that product in return for specified royalties or payments.

Market Access: The extent to which a domestic industry can penetrate a related market in a foreign country. Access can be limited by tariffs or other non trade barriers.

Marine insurance: Insurance that compensaes the owner of goods transported at sea in the event of loss that cannot be legally recovered from the carrier.

Master Lease: A contract where the lessee leases currently needed assets and is able to acquire other assets under the same basic terms and conditions without negotiating a new contract.

Maturity date: Date at which payment is due under a term bill of exchange.

Middle Market: A market segment generally represented by financing under $2 million. In leasing this sector is dominated by single investor leases.

Most Favored Nation Treatment (MFN): When one country accords another most-favored nation status, it agrees to extend to that country the same trade concession it grants to other MFN recipients. GATT members have agreed to accord each other MFN status. Preferential treatment accorded developing countries, customs unions and free trade areas all represent allowable exceptions to the MFN concept. This is sometimes now called "Normal Trading Relations."

National Treatment: The concept that countries must afford foreign companies the same access and other benefits they do local domestic firms.

Negotiating bank: Bank nominated on a letter of credit to negotiate the bill of exchange, i.e. check the documents, pay the seller and seek reimbursement from the
Issuing bank.

Negotiation: discussion and give and take leading to an agreement. In respect to Letters of credit is means “buying” of a bill of exchange drawn on another party. In situations where letters of credit are settled by negotiation, a negotiating bank may be
nominated to check the documents, pay the seller and seek reimbursement from the Issuing bank. Alternatively the credit may be freely negotiable at any bank.

Net Lease: A lease wherein payments to the lessor do not include insurance and maintenance, which are paid separately by the lessee.

Nonrecourse Loan: In a leveraged lease, the lenders cannot look to the lessor for repayment. The lender's only recourse is to the lessee and, therefore, the lessee's credit rating is of prime importance.

Non Tariff Barriers: Measures other than tariffs that restrict imports. Import quotas, standards, licenses, and other policies can serve as not-tariff barriers.

Non-Vessel Operating Common Carrier: Also known as an NVOCC, a company which consolidates small shipments from different sources consigned to the same destination into a single container for shipment overseas by either ocean or air carriers.

Nostro-vostro accounts: Accounts held by correspondent banks in each others' currencies. Each such account has a nostro view - our money held with you - and a vostro view - your money held with us.

Notify party: the party who is to be notified when goods arrive at their destination.

Ocean bill of lading: A bill of lading indicating that the exporter consigns a shipment to an international carrier for transport to a specified foreign destination. Unlike an inland bill of lading, the ocean bill of lading also serves as a collection document.

On boar bill of lading: A bill aof lading inwhich a carrier certifies that goods have been placed on board a certain vessel.

Open account: Trading method in which goods are dispatched to a buyer and paid for after they have been received.

Open account trading and collections: A bill of exchange that will be drawn on and accepted by the buyer.

Open Insurance Policy: A marine insurance policy that applies to all shipments made by an exporter over a period of time rather than to one shipment only.

Open-end Lease: A conditional sale lease in which the lessee guarantees that the lessor will realize a minimum value from the sale of the asset at the end of the lease.

Operating Lease: Any lease that is not a capital lease. These are generally used for short term leases of equipment. The lessee can acquire the use of equipment for just a fraction of the useful life of the asset. Additional services such as maintenance and insurance may be provided by the lessor.

OPIC: Overseas Private Investment Corporation. A US agency that assists US companies protect their investment against risk in a particular country besides providing other services.

Order: a form of endorsement or transfer. On a bill of exchange, 'order' or 'to order' means that the drawer directs that payment be made to another party (usually a bank).

On a bill of lading: 'order' or 'to order' transfers or assigns title to the goods to another party.

Outward collection: How the Remitting bank refers to a collection. Collection being sent overseas to collecting bank(s) for presentation to buyer.

Outward letter of credit: How the Issuing bank refers to a letter of credit.

Packing list: Document listing the contents of a consignment of goods. May be called for on a letter of credit.

Packager: The person or organization putting together a proposal. In leasing, the leasing company, investment banker, or broker who arranges a leveraged lease.

Patent:A license that secures the holder the exclusive right to make, use or sell and invention.

Paying bank: In a letter of credit, bank that is nominated to make payment to the
beneficiary upon presentation of complying documents.

Perils of the Sea: An insurance term used to designate heavy weather grounding, stranding, collision, water damage or lightning.

Political risk: Risk that political instability in the buyer's country will interfere with a buyer's ability to meet payment obligations.

Present Value: The current equivalent of payments or a stream of payments to be received at various times in the future. The present value will vary with the discount interest factor applied to future payments.

Presentation: In a collection, presentation of documents by a bank to a buyer for payment
or acceptance. In a letter of credit, presentation of documents by a seller to a
bank for payment, acceptance or negotiation.

Presentation period: On a letter of credit, number of days allowed between shipment of goods and presentation of documents to a bank.

Presenting bank: In a collection, bank that presents documents to a buyer for payment or
acceptance.

Prime letter of credit: In a back-to-back letter of credit transaction, the original letter of credit that is offered as security for another letter of credit (second letter of credit).

Pro forma Invoice: An invoice provided by a supplier prior to the shipment of merchandise, informing the buyer of the kinds and quantities of goods to be sent, their value, and important specifications.

Promissory note: Financial document in which the buyer agrees to make payment to the seller at a specified time.

Protest: Legal procedure that may be administered by a notary public, evidencing non-payment or non-acceptance of a bill of exchange. Useful in support of a subsequent civil action against the defaulter. In a collection, the presenting bank may be instructed to arrange for this.

Purchase Option: A provision in a document that gives the party receiving the benefit the right to purchase the property at a future date. In leasing, a provision by which a lessee has the right to purchase the equipment at the end of the lease. The purchase option may be stated at a specified amount or at fair market value.

Put Option: The requirement to purchase an asset at a particular time and at a predetermined price. This term is used in stock, commodities and leasing. In a lease transaction, this is a lessor's right to force the lessee (or some third party) to purchase the equipment at the end of the lease term. IRS guidelines prohibit put options in tax oriented leases.

Quota:The quantity of goods of a specific type that may be imported without restriction or the imposition of additional duties.

Recourse: The right to demand return of money paid. In negotiation of a letter of credit, payment by the negotiating bank will normally be with recourse (i.e. if the Issuing bank subsequently does not pay).

Red clause: A letter of credit instructing an advance payment to be made to the beneficiary upon advice of the credit but before shipment of the goods.

Reimbursing bank: Bank specified as a source of funds in a letter of credit transaction. Bank is not a party to the letter of credit.

Release note: Document given by a bank to a buyer to enable buyer to claim the goods from the carrier. Used when goods are consigned to the bank as a means of retaining constructive control.

Remitting bank: In a collection, bank who remits the documents overseas and in due course receives payment.

Restrictive endorsement: Endorsement transferring title or right to a named party. See also: blank endorsement.

Revocable letter of credit: Letter of credit which may be amended or cancelled unilaterally. Offers no security to seller and so very rare.

Revolving letter of credit:A Letter of credit designed to cover a series of similar consignments over a period of time.

Road consignment note: Transport document used for goods sent by road. This is not a document of title.

Rules of Origin: Rules used to determine in what country a good will be considered as actually made for tariff and other trade purposes.

Safeguards:Temporary measures to protect an industry when it experiences increased competition by foreign suppliers. Safeguards can take the form of tariffs or quantitative restrictions.

Sale-leaseback: An arrangement whereby equipment is purchased by a lessor from the company owning and using it. The lessor then becomes the owner and leases it back to the original owner, who continues to use the equipment.

Sales-type Lease: A lease by a lessor who is the manufacturer or dealer, in which the lease meets the definitional criteria of a capital lease or direct financing lease.

Schedule B: Short form of Schedule B, Statistical Classification of Domestic and Foreign Commodities Exported from the United States. All commodities exported from the US must be assigned a seven-digit Schedule B number.

Second beneficiary: Where a transferable letter of credit is used, party to whom part of the value of this credit is transferred.

Second issuing bank: Bank issuing the second letter of credit in a back-to-back letter of credit transaction. Usually the Advising bank to the prime letter of credit.

Ship's manifest: An instrument in writing, signed by the ship's captain that lists the individual shipments that make up the entire ship's cargo.

Single Investor Lease: (See Full Payout or Finance Lease) A tax-oriented lease whereby the lessor achieves its desired rate of return via a combination of the rental payments, depreciation, and the fair market value of the equipment at the end of the original lease term. This method is utilized because the value of the tax benefit allows the rental payments to be lower than for a finance lease which can be an incentive to the company leasing the property.

SME:Small and Medium sized business enterprises. Generally SMEs create the most jobs and have the highest rates of entrepreneurship.

Small-ticket Leasing: Transactions under $100,000. In leasing, this is usually accomplished through conditional sale leases or single investor true leases.

Sovereign risk: Risk that a government or sovereign power will default on its payment
obligations.

Spot rate: Exchange rate for foreign exchange transactions for immediate or
near-immediate execution.

Standard Industrial Classification (SIC): The standardized numerical SIC code used by the US government to classify commodities, used in international trade.

Standard International trade classification (SITC): A standard numerical code system developed by the United Nations to classify commodities transported in international trade.

Standby letter of credit: A letter of credit designed to be used only when the applicant defaults on another agreed method of payment.

SWIFT: Society for Worldwide Interbank Financial Telecommunication. An organization that operates the major interbank electronic communication system for financial messages (payments, letters of credit, securities transactions etc.)

Tare weight: The weight of a container and packing materials which excludes the weight of the goods it contains.

Tariff:A tax applied to goods transported from one customs area to another, or on imported products. Tariffs can be imposed to raise income for a country or to limit import competition.

Tax Lease: A lease wherein the lessor recognizes the tax incentives provided by the tax laws for investment and ownership of equipment. Generally, the lease rate factor on tax leases is reduced to reflect the lessor's recognition of this tax incentive.

Technology Transfer: Through trade or capital flight, the movement or sharing of technology.

Telegraphic transfer: Payment instruction sent from one bank to another by electronic means, either SWIFT or telex. This is generally the method of choice for urgent or high-value payments.

Term bill: A bill of exchange on which payment is due at a future date.
This is sometimes called a tenor bill.

Through bill of lading: A single bill of lading converting both the domestic and international carriage of an export shipment. An air waybill is essentially a through bill of lading used for air shipments. On the other hand, ocean shipments usually require two documents - an inland bill of lading for domestic carriage and an ocean bill of lading for international shipment.

Time draft: A draft that matures either a certain numbe of days after acceptance or a certain number of days after the date of the draft.

Title document: A document granting title. It can also include a transport document in which the bearer has title to the goods, and so can claim them from the carrier at their destination.

To order: Usually means a direction transferring ownership rights - an endorsement. On a bill of exchange 'order' or 'to order' means that the drawer directs payment to be made to another party (usually a bank). On a bill of lading, 'order' or 'to order' assigns title to the goods to another party.

Trac Lease: A tax-oriented lease of motor vehicles or trailers that contains a terminal rental adjustment clause and otherwise complies with the requirements of the tax laws.

Trademark: A registration process under which a name, logo, or characteristic can be identified as exclusive.

Transferable letter of credit : A letter of credit part of whose value can be transferred to another party

Transhipment: Transfer of goods from one vessel to another during its journey. Some letters of credit prohibit this.

Transparency: The concept of making trade-related administrative processes easier to follow, including opening them to public scrutiny and subject to clear methods of challenge or amendment.

Transport document: Document given by the carrier to the shipper (seller) This document serves as receipt for the goods during shipment and as evidence of a carriage contract. The transport document MAY also serve as a document of title.

Transaction Statement: A document that clearly outlines the terms and conditions agreed upon between an importer and an exporter.

Transshipment:The practice of shipping a good into a third country and re-exporting it to another market as a product of the third country.

True Lease: A type of transaction that qualifies as a lease under the Internal Revenue Code. It allows the lessor to claim ownership and the lessee to claim rental payments as tax deductions.

Trust Receipt: Release of merchandise by a bank to a buyer in which the bank retains title to the goods. The buyer is obligated to maintain the goods-or the proceeds from their sale-distinct from the remainder of his assets and to hold them ready for repossession by the bank.

Trustee: A bank or trust company that holds title to or a security interest in leased property for the benefit of the lessee, lessor, and/or creditors of the lessor. A leveraged lease often has two trustees: an owner trustee and an indenture trustee.

Unconfirmed letter of credit: Letter of credit bearing the payment undertaking of a single bank, the Issuing bank.

Uniform Commercial Code (UCC): Rules that have been adopted by many states and countries in respect to commercial transactions.

Uniform Customs & Practices (UCP): ICC rules governing the administration of letters of credit Current revision is UCP 500. Most letters of credit state that they are to be governed by this.

Uniform Rules for Collections (URC): ICC rules governing the administration of collections. Current revision is URC 522, which replaces URC 322.

Value-added:The increased value at each stage of a manufacturing assembly process.

Value date: Date on which a foreign exchange contract is executed, i.e. seller delivers
foreign currency.

Vendor Leasing: A financing vehicle between a financing source and a vendor to provide financing to stimulate the vendor's sales. The financing source offers leases or conditional sales contracts to the vendor's customers. The vendor leasing firm substitutes as the captive finance company of a manufacturer or distributor through the extension of leasing to customers, provisions of credit checking, and performance of collections and operational administration. Also known as a lease asset servicing or vendor programs.

Vostro account: How a correspondent bank refers to funds it holds on behalf of an overseas correspondent.

Warehouse receipt: A receipt issued by a warehouse listing good received for storage.

Warehouse-to-warehouse: An Insurance policy which covers goods over the entire journey from the seller's to the buyer's premises.

Weight note: Document issued by either the exporter or a third party declaring the weight of goods in a consignment. This must agree with the weight declared on the transport document and shown on the invoice.

Without reserve: A term indicating that a shipper's agent or representative is empoered to make definitive decision and adjustments abroad without approval of the group or individual represented.

World Trade Organization: Created by the Uruguay Round and successor to the GATT, this organization began operations on Jan. 1, 1995, to oversee international trade.