March 4, 2010

A-Z of Terms – D

Filed under: Uncategorised — Tags: Accepted Bill Of Exchange, Bill Of Exchange, Bills Of Exchange, Cigarettes, Country Of Origin, Credit Period, Customs Duty, Discount House, Drawee, Due Date, Duty Rates, Face Value, Financial Solutions, Free Circulation, Import Duty, International Trade, Letter Of Credit, Letters Of Credit, National Businesses, Payment Acceptance, Recourse, Vat — sheriegriffiths.com @ 10:25 am

From International Trade Financial Solutions.

Discount: Defined here in relation to the discounting of Commercial Paper – typically Bills of Exchange. Where a future dated Bill of Exchange has been accepted by the drawee [the one who's due to pay - see below], it may be possible to discount the Bill. A Discount House [or bank] may agree to advance the bulk of the face value of the bill, thus helping your cashflow. Discounting can be with or without recourse [see Recourse, later on]. Usually only bank endorsed bills will be discounted without recourse [except for some specific agreements - usually restricted to larger, multi-national
businesses].

Drawee: The party on whom a Bill of Exchange is drawn, i.e. the one who is buying and has to make payment.

Drawer: The party who draws up the Bill of Exchange – the seller.

Drawing: In terms of Letters of Credit, a drawing is the presentation of documents for payment/acceptance under the Credit. Depending on the terms of the Credit, a drawing may be for part or the whole of the value of the Credit.

Due Date: The date on which payment of an accepted Bill of Exchange or a drawing under a deferred Letter of Credit becomes due. [A deferred Letter of Credit is one where there is a credit period between presentation of documents and payment, but no Bill of Exchange has been called for].

Duty: Import Duty may have to be paid on certain imports into the UK. Generally, there is no duty on goods that are already in free circulation within the EU. For goods imported from outside the EU, rates depend on product and Country of Origin. Duty rates are always based on the CIF value of the goods [regardless of which Incoterm was actually used for the contract] and VAT is added to the CIF value. Care, rates can and do change regularly and at short notice. Customs Duty is different, and applies to specific goods irrespective of their origin, for example, cigarettes, alcohol, etc. coming into the UK. For both types, it is usual
to have to pay the relevant duty amount to HMRC before goods are released [but see Duty Deferment below].

Duty Deferment: For regular importers, it may be possible to obtain a Duty Deferment bond from your bank and lodge this with HMRC. The effect of such a bond is that goods are released quicker and you pay the duty in arrears. There is a cost insofar as the bank will view this as a contingent liability and may require security and will almost certainly charge you for its issuance. Also, the bond must cover an average 2 month’s value of imports.

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June 17, 2009

Glossary of International Trade Terms – A

Filed under: Uncategorised — Tags: Alphabet, Amendments, Amp, Banks, Bill Of Exchange, Bills Of Exchange, Confines, Credit Operations, Designation, Drawee, Expression, Financial Solutions, Importers, International Trade Terms, Letter Of Credit, Maximum Fee, Note However That, Personal Experience, Signature, Xyz — sheriegriffiths.com @ 8:32 am

As promised yesterday, here’s more from the latest newsletter from Ray at International Trade Financial Solutions – http://www.inttradefinsolns.co.uk.

Today, Ray starts his glossary of common international trading terms.

Over the course of the next few issues, I thought that it may be useful to include some of the terms that are often seen in International Trade and a brief explanation. I cannot promise to include every one – we’d be here for ages but I will try to incorporate some that, from personal experience, I know have caught out both importers and exporters. I’ll also try to keep things alphabetical, so if anyone wants help on a particular term or expression and I have passed that point in the alphabet, let me know, and I’ll include it in the next available newsletter.

Here goes…..

A.

Acceptance.

(See yesterday’s post). When applied to Bills of Exchange, it is the act of the buyer [the Drawee] accepting that the amount quoted on the bill is correct and is a valid sum due from them to the Drawer. Acceptance is achieved by signing the bill - usually in the form ‘Accepted, for and on behalf of XYZ Ltd, [plus signature & designation]‘.

Accepting Bank.

The bank specifically mentioned in a Letter of Credit as being the one upon whom any required Bill of Exchange is to be drawn.

Ad valorem.

Literally, according to value. Included here since some banks still levy a sliding scale of charges [ad valorem] to some of their International services. Also important to be aware of minimum/maximum fee levels when comparing the offers of different providers.

Advising Bank.

Within the confines of Letter of Credit operations, a bank, located in the exporter’s Country that handles the Letter of Credit, advising it to the exporter. Should future

amendments, etc. be needed, these will also usually come through the advising bank. Note, however, that the advising bank is not necessarily responsible for payment

nor may you be limited to only dealing with this bank when you come to present documents and seek payment.

AirWay bill.

The shipping document used when goods are transported by air. Unlike a Bill of Lading, it is not a document of title. AWB’s are issued in multiple copies; it is usually copy 3 that is the one passed to the buyer and which he or his agent needs to present to obtain the goods in the destination Country.

Aval, avalisation.

Applies to Bills of Exchange. Unlike cheques, which are a form of Bill of Exchange, all parties to a Bill have to sign/endorse the Bill. Where someone whose name does not appear on a bill signs it, they are said to have added their aval or avalised it. The effect of doing this makes then liable should the bill be unpaid by the other parties. Often requested of banks by holders of the bill. A bank avalised bill is almost as good as cash and can be sold to obtain funds and help cashflow. Often overlooked by sellers.

OK, that’s enough. B’s next time……..