Glossaire complet des termes relatifs au financement du commerce et aux lettres de crédit stand-by (SBLC)

1. Acceptance Credit

A letter of credit providing deferred payment, allowing buyers more time to fulfill obligations while giving exporters payment security. Commonly used to improve cash flow in international trade transactions.

2. Advance Payment Bond

A financial guarantee issued by a bank protecting buyers who pay suppliers upfront. Essential in construction contracts and large international projects to mitigate supplier default risks.

3. Advance Payment Guarantee

A bank-issued guarantee safeguarding buyers against the non-delivery of goods or services after an upfront payment. Frequently required in international procurement and infrastructure projects.

4. Advising Bank

The bank responsible for notifying the beneficiary of the issuance of a letter of credit. This intermediary role is vital in ensuring document authenticity in cross-border trade finance.

5. Applicant

The party requesting a letter of credit or bank guarantee, typically the importer or buyer. Understanding the applicant’s role is fundamental in structuring trade finance transactions securely.

6. Assignment of Proceeds

An arrangement allowing beneficiaries of a letter of credit to transfer payment rights to third parties. Widely used in structured trade finance to improve liquidity for exporters.

7. Aval

A guarantee by a bank endorsing the payment of a bill of exchange. Often utilized to enhance creditworthiness and facilitate smoother international trade payments.

8. Back-to-Back Letter of Credit

A secondary letter of credit issued using a primary LC as collateral. Commonly employed by intermediaries or trading companies engaging in multi-party international transactions.

9. Bank Guarantee

A commitment issued by banks ensuring the fulfillment of contractual obligations if the applicant defaults. Crucial for securing trade agreements and international business transactions.

10. Beneficiary

The party entitled to receive funds under a letter of credit or guarantee, usually the exporter or service provider. Understanding beneficiary rights is key in mitigating trade risks.

11. Bid Bond

A guarantee ensuring a bidder’s commitment to honor a contract if awarded. Standard in international tenders, particularly construction and public procurement.

12. Bill of Exchange

A legally binding, written order requiring one party to pay a fixed sum to another. Frequently used to settle international trade transactions with deferred payments.

13. Bill of Lading (B/L)

A transport document confirming receipt, shipment, and ownership of goods. Critical in international logistics and required for letter of credit transactions.

14. Cash Against Documents (CAD)

A payment method where the buyer pays upon receipt of shipping documents. Popular in trade transactions with moderate risk between established partners.

15. Clean Bill of Lading

A transport document indicating goods were received without damage. Vital for exporters to ensure smooth payment under letters of credit.

16. Collateral

Assets (such as real estate, cash reserves, or inventory) pledged by a borrower to secure a loan or credit facility. Unlike traditional banks that require full collateralization, specialized providers like Credit Glorious can often structure facilities based on the transaction's strength rather than pledged assets.

17. Completion Bond

A financial guarantee ensuring projects (e.g., infrastructure) are completed within budget and timeline. Essential to manage risk in international construction deals.

18. Confirmed Letter of Credit

A letter of credit that carries the payment guarantee of a second bank (confirming bank) in addition to the issuing bank. This provides double security for the exporter, especially when dealing with buyers in high-risk regions.

19. Confirming Bank

An additional bank guaranteeing payment alongside the issuing bank in a letter of credit transaction. Essential in mitigating risk from unfamiliar or high-risk jurisdictions.

20. Corporate Guarantee

A guarantee issued by a corporation agreeing to be responsible for the financial obligations of another party (often a subsidiary or partner). This is frequently used in complex trade structures to add security without involving bank assets directly.

21. Correspondent Bank

A bank that provides services (such as wire transfers or SWIFT messaging) on behalf of another financial institution. They act as the essential bridge in cross-border trade when the issuing and advising banks do not have a direct relationship.

22. Counter Guarantee

A guarantee provided by one bank to support another bank’s primary guarantee. Used in cross-border trade to manage risk between international financial institutions.

23. Credit Facility

A standing agreement between a lender and a borrower that allows the business to take out money or request instruments (like LCs) up to a specific limit.

24. Customs Bond

A guarantee ensuring importers will pay customs duties and taxes. Crucial for smooth international logistics and regulatory compliance in global trade.

25. Demand Guarantee

A bank guarantee payable immediately upon demand by the beneficiary. Commonly required in international contracts to ensure quick compensation without lengthy disputes.

26. Demurrage

A charge for delayed loading/unloading of cargo beyond agreed timelines. Relevant in shipping contracts and international logistics management.

27. Documentary Collection

A trade finance method where banks exchange shipping documents against payment. Useful for managing risks in trusted trade relationships.

28. Documentary Credit (Letter of Credit)

A bank-issued guarantee of payment upon presentation of compliant trade documents. Fundamental in international trade for managing payment risks securely.

29. Draft (Verbiage)

The preliminary text of a financial instrument (such as an LC or SBLC) sent to the applicant for review. The applicant and beneficiary must approve the text (verbiage) before the final instrument is issued via SWIFT.

30. Evergreen Letter of Credit

An automatically renewable letter of credit. Suitable for ongoing international supplier relationships requiring long-term payment guarantees.

31. Export Credit Agency (ECA)

A government-backed agency providing financing and insurance to exporters. Essential for facilitating international trade into higher-risk markets.

32. Factoring

A financing service where exporters sell receivables at a discount for immediate liquidity. Crucial in trade finance to improve cash flow without additional debt.

33. Forfaiting

Export finance technique involving selling medium to long-term receivables at a discount. Highly effective for securing immediate liquidity in capital-intensive international exports.

34. Forward Contract

A customized agreement to buy or sell currency at a future date at a fixed rate. Essential for managing foreign exchange risks in global trade operations.

35. Guarantee Facility

A pre-approved credit line enabling issuance of multiple guarantees. Convenient for frequent users of guarantees in global trade transactions.

36. ICC (International Chamber of Commerce)

Global organization defining international trade standards, including Incoterms and UCP 600. Key authority ensuring uniform practices in trade finance.

37. Incoterms®

International rules published by ICC defining trade responsibilities between buyers and sellers. Critical for structuring international contracts and managing trade risk.

38. Irrevocable Letter of Credit

A letter of credit that cannot be changed without consent from all parties involved. Preferred in international transactions for assured payment security.

39. Issuance Fee

The fee charged by the financial institution to formally issue and transmit a financial instrument (like an SBLC or LC) via SWIFT. This is typically the final step after the draft has been approved and due diligence is complete.

40. Issuing Bank

Bank creating and issuing the letter of credit at the request of the buyer. Essential for facilitating secure and compliant international trade payments.

41. KYC (Know Your Customer)

A mandatory compliance process where financial institutions verify the identity and background of their clients. This is essential to prevent fraud and money laundering and is the first step in onboarding with a regulated provider like Credit Glorious.

42. Maintenance Bond

Guarantee ensuring contractor repairs defects post-project completion. Common in international infrastructure projects to maintain quality standards.

43. Non-Recourse Financing

Financing secured solely by collateral, limiting the borrower's obligations. Commonly used in structured trade finance to isolate transaction risk.

44. Open Account

Trade arrangement allowing goods shipment with deferred payment. Used in international trade among highly trusted partners with low payment risk.

45. Packing Credit

Short-term finance provided to exporters to cover costs before shipment. Important in international trade for improving exporters’ cash flow.

46. Performance Bond

Guarantee ensuring contractual obligations are fulfilled. Essential in international construction and large-scale project contracts.

47. Pre-Export Financing

Credit facilities provided to exporters ahead of shipment. Crucial for managing liquidity in export-oriented businesses.

48. Pro Forma Invoice

A preliminary bill of sale sent to buyers in advance of a shipment. It outlines the goods, price, and terms of sale, and is the primary document required to apply for a Letter of Credit.

49. Red Clause Letter of Credit

A specific type of Letter of Credit that allows the seller to receive an advance payment (pre-shipment finance) from the confirming bank, historically written in red ink.

50. Retention Bond

Guarantee replacing retention money withheld by buyers. Helps maintain liquidity for international contractors without reducing buyer security.

51. Revolving Letter of Credit

An LC allowing multiple transactions within a defined limit. Ideal for continuous international trade dealings with regular suppliers.

52. RWA (Ready, Willing, and Able)

A document or bank message confirming that a client has the capability (funds or credit line) and the intent to enter into a specific financial transaction. It is often requested by sellers before signing a major contract.

53. Sanction Screening

The process of checking individuals, companies, and vessels against global sanction lists (such as OFAC, UN, or EU lists). This ensures that the trade transaction complies with international laws and banking regulations.

54. SBLC (Standby Letter of Credit)

A bank guarantee activated if the applicant fails contractual obligations. Widely used in trade finance as security for performance and payments.

55. Supply Chain Finance

Financing method optimizing working capital in global supply chains. Increasingly popular among multinational corporations to streamline payments.

56. SWIFT MT103

The standard SWIFT message used for making a direct cash payment (wire transfer) between banks. In trade deals, this is often used for the final settlement payment once the terms of a Letter of Credit have been met.

57. SWIFT MT700

The standardized SWIFT message type specifically used to issue a Documentary Letter of Credit. It details all the terms, conditions, and documents required for the beneficiary to get paid.

58. SWIFT MT760

SWIFT message used for issuing bank guarantees or standby LCs. Essential for secure communication of trade finance instruments globally.

59. SWIFT MT799

SWIFT message format for preliminary bank-to-bank communication. Often precedes issuance of trade finance instruments like guarantees or LCs.

60. Trade Credit Insurance

Insurance protecting exporters from buyer non-payment risks. Vital tool to secure international trade transactions.

61. Transferable Letter of Credit

An LC allowing the beneficiary to transfer rights partially or entirely to third parties. Useful in complex international supply chains.

62. UCP 600

ICC-published universal rules governing letters of credit. Crucial to ensure uniform interpretation and practice in global trade finance.

63. Uniform Rules for Demand Guarantees (URDG 758)

ICC rules standardizing practices for demand guarantees. Important reference for structuring bank guarantees in international trade.

64. Unsecured Credit

A loan or credit line that is not backed by collateral (such as property or cash). This type of financing relies on the borrower's creditworthiness and the solidity of the trade deal itself.

65. Usance Letter of Credit

Deferred payment LC providing buyers extended payment terms. Helps manage importer liquidity while securing exporter payment.