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……..