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Glossary

 

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C&F or CFR

Carriage and Freight

 

CAD: Cash Against Documents

Method of payment for goods in which documents transferring title are given to the buyer upon payment of cash to an intermediary acting for the seller, usually a bank or commission house.

 

CAD

Canadian dollar.

 

CAFTA-DR: Central America and Dominican Republic Free Trade Agreement

One of a series of free trade agreements involving the U.S. and other countries. Benefits include duty-free or reduced-duty access, better overall market access, treatment equal to local companies, and intellectual property protection. 

 

Carnet

Customs document allowing special categories of goods to cross international borders without paying duties or posting bonds.

 

Carrier

A company that transports goods (via truck, airlines and ship).

 

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 authorized to instruct the bank.

 

Cash Cover

In a letter of credit transaction, money is deposited by the applicant with the issuing bank: e.g. when existing credit facilities are fully utilized.

 

Cash in Advance (advance payment)

Payment from a foreign customer to a U.S. exporter prior to actually receiving the exporter's products. It is the least risky form of payment from the exporter's perspective. 

 

Certificate of Conformity

Signed statement from a manufacturer attesting that a product meets certain technical standards. 

 

Certificate of Free Sale

Signed statement from the producer or exporter attesting that a product has been commercially sold within the country of origin. 

 

Certificate of Inspection

A certificate usually required for industrial equipment and meat products.

 

CFR: Cost and Freight

Title, risk and insurance cost pass to buyer when goods are delivered on board the ship by seller and cross the ship's rails; seller pays the transportation cost to the ocean port of destination; used for ocean vessel port-to-port, shipments that are not containerized.

 

CHIPS: Clearing House Interbank Payment System

An electronic payment system, made up of member banks, which is based in New York.

 

CIA: Cash in Advance

Method of payment for goods in which the buyer pays the seller in advance of the shipment of goods. Usually employed when the goods, such as specialized machinery, are built to order.

 

CIF: Cost, Insurance and Freight

Title and risk pass to buyer when goods are delivered on board the ship by seller and cross the ship's rail; seller pays transportation and insurance cost to ocean port of destination; used for ocean vessel port-to-port, shipments are not containerized.

 

CIP: Carriage and Insurance Paid To

Title and risk pass to buyer when delivered to first carrier at named place or port of destination by seller, who pays transportation and insurance cost to destination; used for any mode of transportation, including air or ocean containerized and roll-on/roll-off shipments

 

CIS

Commonwealth of Independent States.

 

CIQ

China Inspection and Quarantine Services.

 

CIV

Customs Import Value.

 

CLABE / CLAVE

A bank which is owned by the same parent company and is “affiliated” with another bank (such as Lafayette Ambassador, Fulton Bank of New Jersey, FNB Bank, etc.).

 

Clean Bill of Lading

A receipt for goods issued by a carrier with an indication that the goods were received in "apparent good order and condition," without damage or other irregularities.

 

Clean Draft

A sight or time draft (bill of exchange) which is not accompanied by additional documents. Also referred to as "Clean Collection".

 

Clearing Number

Swiss Bank Code; this is included in the IBAN (similar to a routing number).

 

Close Out

When used as a verb, means to accelerate, terminate, liquidate or cancel transactions under an FX contract.

 

CNY

Chinese Yuan Renminbi. 

 

COD

Cash on delivery. 

 

Collecting Bank

Bank in the importer's country to which the remitting bank sends a draft and/or documents for collection.

 

Collection

A draft drawn on the buyer, usually accompanied by documents, with complete instructions concerning processing for payment or acceptance.

 

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

A bill of lading used when more than one carrier is involved in a shipment, for example when a consignment travels by rail and by sea; sometimes referred to as a multi-modal bill of lading.

 

Commercial Documents

Documents exchanged between the buyer and the seller such as Commercial Invoices or transport documents that give detail about the goods and/or services contracted.

 

Commercial Invoice

Seller's itemized list of goods and invoice shipped with descriptions, details, prices and costs addressed to the buyer. Serves as the basis for all other documents about the shipment.

 

Commercial Letter of Credit

Also called a documentary letter of credit, it is a written document issued by a bank (at the request of the bank's customer) to a specified beneficiary to make payment to the beneficiary under specified conditions.

 

Commercial Paper

In Letter of Trade (as distinguished from customary usage in domestic finance), any draft or other item to be presented for collection.

 

Commercial Risk

In export financing, the risk of the foreign purchaser’s ability and willingness to repay.

 

Commitment Fee

(1) Fee charged by a forfeiter for reserving funds to forfaiting transaction. (2) Fee charged by a negotiating bank for waiving recourse to the beneficiary in the event of non-payment by the issuing bank.

 

Common Carrier

A public or privately owned firm or corporation that transports the goods of others over land, sea, or through the air, for a stated freight rate. By government regulation, a common carrier is required to carry all goods offered if accommodations are available and the established rate is paid.

 

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 compliant.

 

Confirm

To assume an obligation to pay under a Letter of Credit. See “Confirming Bank”.

 

Confirmation

The act of a bank to add its commitment to that of the issuing bank to pay the beneficiary for compliance documents, although the act of confirmation does not relieve the issuing bank of its obligation to the beneficiary.

 

Confirm Credit

A letter of credit in which  in which the issuing bank's obligation to pay is backed (confirmed) by a second bank.

 

Confirmed Letter of Credit

A letter of credit guaranteed by both the issuing and advising banks of payment so long as seller's documents are in order, and the letter of credit terms are met. The confirming bank assumes the credit risk of the issuing bank.

 

Confirming Bank

The correspondent bank that adds its confirmation to the issuing bank's letter of credit and promises to pay the beneficiary upon presentation of documents specified in the letter of credit.

 

Confirming House

Company based in a foreign country that acts as a foreign buyer's agent and places confirmed orders with the U. S. exporters. The confirming house guarantees payment to the exporters. 

 

Consignee

The Importer, Buyer, or person to whom goods are destined to be delivered.

 

Consignment

Method of payment for exports by which title to goods does not pass to the importer, and the goods are not paid for until they are sold to a third party.

 

Consignor

A term used to describe any person who consigns goods to himself or to another party in a bill of lading or equivalent document. A consignor might be the owner of the goods, or a freight forwarder who consigns goods on behalf of his principal.

 

Consolidator's Bill of Lading

A receipt for merchandise issued by a freight consolidator (forwarder) to a shipper for goods to be consolidated with other cargoes prior to shipment.

 

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.

 

Container Shipments

Goods shipped in a containerized fashion. Here, the carrier takes the word of the shipper and marks the bill of lading “Shipper’s load & count”. The carrier does not verify.

 

Contract

Written or oral agreement that is legally enforceable. 

 

Control of Goods

Exercised through the transport documents, control of goods determines whether the buyer will be able to clear an inbound shipment without the transport documents, and thus without paying for the documents held at the bank.

 

Convertibility

The ability of owners of a currency to exchange it for foreign currencies in the open market.

 

COO: Certificate of Origin 

A certified document showing the origin of goods, required by certain countries for tariff purposes.

 

Copyright

Protection granted to the authors and creators of literary, artistic, dramatic, and musical works, sound recordings, and certain other intellectual works. A computer program, for example, is considered a literary work in the United States and some other countries. 

 

Corporate Agreement

An agreement between a corporate customer and the bank to accept wire and draft requests so the customer does not have to contact the branch every time they wish to send a wire.

 

Correspondent Bank

A bank that, in its own country, handles the business of a foreign bank.

 

Counter Credit

Another name for back-to-back letter of credit.

 

Countertrade

General expression meaning the sale or barter of goods on a reciprocal basis. There may also be multilateral transactions involved. 

 

Countervailing Duties

Additional duties imposed by an importing country to offset government subsidies in an exporting country when the subsidized imports cause material injury to domestic industry in the importing country. 

 

Country of Origin

The country where a product is made, as determined by the amount of work done on the product in the country and attested to by a certificate of origin.

 

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.

 

CPA

Commodity Purchase Agreement. 

 

CPT: Carriage Paid To

Title, risk and insurance cost pass to buyer when delivered to first carrier at named place or port of destination by seller, who pays transportation cost to destination; used for any mode of transportation, including air or ocean containerized and roll-on/roll-off shipments.

 

Credit

In Letter of Shipping terms, this word is used interchangeably with Letter of Credit.

 

Credit Risk

The risk that a buyer or seller will not complete a deal due to their inability to meet their obligations, or a deterioration in their financial position.

 

CST 180 

A type of fuel oil. 

 

CST 380

A type of fuel oil. 

 

Currency Hedging Products

Help to guard against foreign exchange fluctuations with spot contract, forward contract and foreign currency options.

 

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 Broker

A person or firm, licensed by the treasury department of their country when required, engaged in entering and clearing goods through customs for a client (importer).

 

Customs-Bonded Warehouse

Building or other secured area in which dutiable goods may be stored, 

 

Customs Declaration

Document that traditionally accompanies exported goods bearing such information as the nature of the goods, their value, the consignee, and their ultimate destination. Required for statistical purposes, it accompanies all controlled goods being exported under the appropriate permit. 

 

Customs Invoice 

Document used to clear goods through customs in the importing country by providing evidence of the value of goods. In some cases, the commercial invoice may be used for this purpose. 

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