From International Trade Financial Solutions – www.inttradefinsolns.co.uk
Glossary of Terms – The “B’s”.
2 big B’s were covered last month, so we’ll mop up the rest this month. Nothing as complex this time round.
B. [continued]…
Bank Collections. More usually referred to as Collections, so I will include this under ‘C’.
Beneficiary. Pretty obvious, but included here as, under Letters of Credit, the Exporter is also known as the beneficiary of the Credit, a potential source of confusion. Think of it as the exporter being the beneficiary of the payment.
Bonded Warehouse. Specific warehouses authorised by HMRC where imported goods can be stored without payment of duty. However, duty must be paid before the associated goods can leave the warehouse. The use of bonded facilities can benefit those businesses whose goods are subject to duty insofar as the duty can be deferred, giving cashflow advantages. However, this has to be weighed up against the costs to store the goods in the first place.
BIFA – British International Freight Association. BIFA is the body representing the UK international freight services industry. Not all freight forwarders are BIFA members, and there are pros and cons of using one. However, what is important, whoever you use to move your goods, is to be totally satisfied with their service provision and have comfort that, if things do go wrong, they will work with you to resolve. Look at the BIFA website for more information and/or to find members – www.bifa.org N.B. If you accidentally click on www.bifa.org.uk you end up at the British International Film Association – do not get confused!
Bonds and Guarantees. Often associated with tendering and/or undertaking contracts overseas. In some countries, e.g. Middle East, it is common to have to provide a tender bond when tendering for a contract [especially state backed ones]; then a performance bond if you win. You may also need to provide an Advance Payment Bond in some circumstances. In all cases, the bond is issued on your behalf by your bank and basically gives the overseas party more confidence that you can undertake the contract in hand. If you do not, they will call upon the bond. Unless you are well versed in agreeing to having these issued, you should seek proper advice before you commit, as they can be costly, difficult to cancel and have other peculiarities. Note that, in some parts of the world, performance bonds have been replaced by Stand-by Letters of Credit. Also, the words ‘bond’ and ‘guarantee’ are to all intents interchangeable.
That’s the B’s – on to the C’s next month.
