CMR – Convention Merchandises Routiers: These are the conditions for the international movement of goods by road.

Collections: Again, held over from Issue 10. A bank collection is the collection of trade debts through the banking system whereby documents relating to the shipment of goods are passed through the banking system and exchanged either for payment or an acknowledgement of acceptance [usually by means of a Bill of Exchange] for payment at a fixed future date. Both buyer and seller must agree to this course of action at the start and, unlike Letters of Credit, there is no undertaking by the bank to pay. It is generally felt that this is a more secure method than open account trading.

Confirmed Letter of Credit: I will cover this when we look at Letters of Credit, later in the series.

Consignee: The party to whom goods are sent.

Consignor: Also known as the shipper; the party despatching the goods.

Consignment (1): The underlying goods sent by the consignor to the consignee.

Consignment (2): Care – if goods are exported subject to consignment, the exporter will only receive payment on completed sales. Any unsold may be returned to the seller, at the seller’s expense. Can be high risk and expensive.

Containerisation: The use of sealed containers into which goods are packed for shipment.

Convertible Currency: A currency that can be freely bought and sold for other currencies at will, e.g. Sterling, US Dollar, Euro, etc. Exporters must ensure that payment for their goods will be in a freely convertible currency. Note, however, that this may not necessarily mean that funds will be immediately available, if the country concerned still uses exchange control.

Correspondent Bank: A bank that operates in its own Country the business of a foreign bank.

CPT Incoterm: Carriage Paid To [named place]. The seller clears the goods for export and pays for delivery to a named place. The goods are deemed to have been delivered, and the responsibility for them passes to the buyer, once they have been taken by the seller’s carrier.

Customs: Generic term for HMRC. Whether you are importing or exporting, you must follow HMRC regulations, which are complex and detailed. If you use a freight forwarder or shipping agent, they can undertake much of the customs procedures on your behalf but, like tax returns, you are still ultimately liable for the accuracy, etc. of all declarations.

Customs Commodity Code: Also known as CN Code. An 8 digit code required for all goods to be exported outside the EU. Imports from outside the EU have a 10 digit code. These must be entered on the relevant documentation and are available from HMRC via their publication known as The Tariff.

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……..