To do the export business, we should at first know all types of definitions and concepts that are directly and indirectly related with exporting. Several concepts are stated below:
A
Advance Trade vat (ATV)
When advances have been taken during the import of goods, then it is called the Advanced Trade VAT. It is usually made for certain products, which are not possible to earn VAT at the production and supply level.
Advice through in Proforma Invoice
In Proforma Invoice, there states a column called Advise through in Proforma Invoice. This column generally specifies the bank details. Exporter has to give his bank address and other details where importer pays the contract value or products price or invoice price.
Advising bank
Letter of Credit (LC) Issuing Bank, which is sending the letter of credit (LC) to the seller through another bank, is called Advising Bank. In some cases, the Bank of Beneficiaries is itself an Advancing Bank. It is also called exporter’s bank.
Applicant
In the export trade, the person or company who pays the money or value of the product is called an applicant. Generally, buyers or importers in local and international business is regarded as Applicant.
Airway Bill
Airway Bill is a shipping document which is generally prepared when goods are transported through Air. It is just like the bill of lading. The only difference is that bill of lading is used for Sea shipment and Airway bill is used for Air transport. The preparing steps and information are almost same in both the documents, except some specific sections.
B
Back to Back LC
When one or more new LCs are opened based on a Master LC, it is called Back-to-back LC. According to the needs of the buyer or importer needs to import raw materials for the production of the product. For this purpose, LC is opened with LC Bank and it is the back-to-back LC. A new LC can be opened for the import of raw material by securing an LC. Then open the new LC for the import to back-to-back LC.
Beneficiary
In any business transaction, the person or organization that receives money is known as a Beneficiary. Most of the time the vendor or Exporter is a beneficiary.
Bid Bond
Bid Bond is a financial guaranteed bond that is subject to auction. For the purpose of providing a Financial Guarantee or auction bid a bid-based selection process is held in the case of recruiting workers for the project owner.
Bid bond contractual based construction process is organized in the middle of the auction. The project owners offer their respective bid bonds in the auction call, among them, the owner who can provide sufficient assurance, he will be able to recruit staff.
The cost of the bid bond or the premium which contractor pays to surety is determined focusing on several factors. Generally, in small projects, the cost or premium is flat fee, such as $100 or $200. One the other hand, in large projects, the cost is based on some percentage of the total project.
Bill of Export
Exporters have to submit a document containing the description of the products before the commodity shipments (during the time the invoice is in the customs house of the port) to the customs authority, which is known as the Bill of Entry or Entry in Export Business. According to the product statement, the Customs Authority issues the bill of entry by fixing duty against the total value of the product.
After reaching the export port, the Forwarding Agent submits a bill of export form to the Customs Authority for export permission with commercial documents (Bank certified original EXP, commercial invoice, packing list, LC / TT bank certified copy). Then, the customs authorities allow the exports by examining the information and product samples mentioned in it on the Bill of Export.
Bill of Entry
The final permission for the import issued by the Customs Authority is called the Bill of Entry. It is provided on the basis of a specific application of information related to imported 56 (printed information) (product description, quantity, quality, value etc.).
After reaching the imported commodity, Customs by completing the Bill of Entry form with Clearing Agent Commercial Documents (bank certified original IMP, LCAF form issued by the bank, commercial invoice, packing list, certificate of origin, LC / TT bank). Authorities have to submit permission for import. Then, the customs authorities allow the import of the Bill of Entry by explaining the information and product samples mentioned in it (Bill of Entry).
Bill of Exchange
A bill of exchange is a type of document where the document signifies a certain amount of money to another specific person. It is a type of debt document and it is mentioned in the date of the debit, number, bank name of the issuing bank. After export shipments in foreign trade, the exporter of the bill of exchange orders the importer to pay the bank. Then, according to the instructions, after accepting the bill of exchange or after paying the notice (example at 90 days’ sight), the banker of the Importer pays the amount of bill to the bank of Exporter.
Bill of Lading
Bill of Lading (BL) is a certificate issued by the ship authority after shipping the goods through which the goods are found to be available. This document is issued to the ship-owner issued by the ship authority to prove the cargo shipments in the ship. This is a negatives document which, in turn, transfers to the exporter price. Bill of Ladder is a very important document for importers and exporters, which helps the importers to understand and understand the meaning of the exporters. The document is also used as evidence of the authority of the ship authority.
BIN Number
BIN or Business Identification Number, refers to that registration number which a businessman gets when he does his business registration activities. Every businessman has to register his business from the registration office. Just like other business, importer and exporter has to complete the registration activities and after completing the activities, they get the BIN number. This number differentiates a business from other.
C
Call Money
In Export business, payable of money in a short period of time (one day or one week) and borrowing of emergency loans by the bank is called call money. In this case, interest payments have to be paid higher.
CCI & E
The full abbreviation of it is Chief Controller of Import and Export. It is that organization from where the importer and exporter have to take registration number and certificate of getting permission of importing and exporting business.
CCI & E Registration Number
When importer and exporter fulfill registration activities of this organization, they get a registration number, which is called CCI & E registration number. In EXP Form, there is a column like CCI & E registration number. Exporter has to provide his CCI & E registration number which he gets from his CCI & E registration.
Certificate of Analysis
Certificate of quality certification of any export product. It is made by the appropriate authorities according to the needs of the buyer. In this case, there is a mention of the specifications of the product supplied by us.
Charges/ bank Charges
Bank charges refers to that costs which banks of importer and exporter cut or take form their account as bank’s income. It includes all charges and fees made by bank to their customer. Generally, importer pays all bank charges of his country’s bank and exporter pays all charges of his country’s bank.
Commercial Documents
Generally speaking, commercial documents include together pf all documents such as Proforma Invoice, Commercial Invoice, Bill of Exchange, Certificate of Origin, Packing List etc.
Commercial Invoice
Commercial invoice is a type of customs document in foreign trade where the value of the exported product is mentioned (customs taxation determines the tax related to the sale of goods outside the country). The exporter has to submit it to his local bank for the acceptability of the price paid by the importer. This document contains the names of exporters and importers, exported product details, payment terms (LCs, TTs), commodity prices, exported products, etc.
Exporter prepares Commercial Invoice before the shipments in its own letterhead according to the number of shipments. If product is transported in two shipments, Exporter will prepare two commercial invoices. If shipment is three, Commercial Invoice will be three.
Confirming bank
At the request of the issuing bank, when another bank provides additional assurance of payment of LC, it is called Confirming Bank.
Confirmed LC
In addition to the bank issuing a letter of credit (LC), the third bank provides additional confirmation of LC’s payment, as the Confirmed LC. LC is confirmed for additional guarantees.
It is to be noted that, if the bank conforms, it is called Confirming Bank. Generally, the Confirming Bank makes confirmation in exchange for a specific charge at the request of the issuing bank.
Consignee or Exporter
The legal owner of the product is called Consignee. Generally, exporter is called the consignee of his product.
Consignor
The buyer is called a consignor, with whom the consignee conducts his business. Consignor buys products in exchange of money. Consignor is also called Importer.
Consignment
Invoices that are used for ordering export is called a consignment. Before going to the final contract and activities, consignment will be signed with mutual consent of both the importer and exporter. In international business, Consignment is called Shipment.
Construction bonds and its types
Construction bond is one kind of contract bond. It provides financial guarantee to the employer that the bills on a construction project will be paid. The issuing insurance company or bank guarantees the completion of the project by the contractor. There are generally three types of construction bonds. Those are: Bid bond, Performance bond, Payment bond.
Cost and Freight (CFR)
Cost and Freight (CFR) is a shipment term or incoterm. In accordance with Incoterms 2010, only CFR trade terms are used for transporting goods on the waterways. In this case, in the case of the trade used in the trade term, the price of the goods is determined by the transport of the port of Destination. In this case, the cost of insurance, unloading of Port of Destination and the exclusion of goods is to be borne by the buyer or importer.
Cost, Insurance and Freight (CLF)
Cost, Insurance and Freight (CIF) is another shipment term or Incoterm. In accordance with Incoterms 2010, only CIF trade terms are used for transporting goods on the waterway. In this case, the trade term used for export, including the price of the goods, the transportation of Port of Destination, rental of insurance, and all the costs including insurance. In this case, the cost of unloading and exporting goods in Port of Destination has to be borne by the buyer or importer.
Note that this trade term is used only in Bangladesh for export. Because, according to the law, it is not available for import.
Country of Origin
Country of Origin generally refers the exporter’s country from where the products are shipped.
Credit Report
Credit Report is a comprehensive account of all financial transactions of a person or organization. Credit reporting agencies or credit rating agencies create a credit report of a person or organization, to determine the eligibility requirements of their bank. Some credit rating agencies of Bangladesh are Credit Rating Agency of Bangladesh Ltd., Credit Rating Information and Services Ltd., etc. According to the credit report of any person or organization, the report of economic and business ability at domestic or international level. Considering this report, decision on financial transactions was taken.
Credit Note
Credit note is a type of commercial instrument that issues the seller which entails the details of the product bought by the buyer, that if the buyer returns the partial product for any reason, then the buyer has to pay less than the price mentioned in the invoice.
D
Demand Draft
Demand draft is a negotiable payment document issued by the bank, which can be called an alternative to bank check. In this, a bank gives money to any other party on the other side, giving a draft to another bank.
Delivered at Place
In the shipping term, the seller receives the responsibility of delivering the product until the address of the customer. In this case, the cost of the goods, including local taxes, taxes and VAT, is borne by the seller.
Description of Goods
In description of goods, there generally includes the products design, price, cost, quantity, quality, packing system, gross weight, net weight etc. In all shipping documents, The description column will be filled exactly as like the information stated in the LC clause.
Discrepant Documents
The documents which are discrete with the terms of the Letter of Credit are called Discrepant Documents. Exporting contracts can be cancelled or exporter mayn’t get the payments because of those discrepancy documents.
D-Marketing
Sometimes, many companies discourage buyer’s products or services through different steps if there is less production or supply than the demand for a service or product. Any organization taking this step is called D Marketing.
Documents against Payment
Documents Against Payment (D / P) is a type of payment system in foreign trade. In this case, the buyer will pay the price immediately after getting the documents. This process is similar to LC at Sight, but the bank does not guarantee payment.
Since the buyer’s bank does not provide any guarantee, the cost of this method is lowest. However, the transaction is a bit volatile since the bank does not provide any guarantee for paying the price. Moreover, there may be a risk of not accepting a buyer’s document or purchasing of a customer. However, if there is a very good relationship between the buyer and the seller, transactions in such a manner are considered safe.
Documents against Acceptance
Document Against Acceptance (D / A) is a form of payment method. In this document, the buyer receives the export documents on the basis of the payment of a specific time later. Generally, the payment period is between 90 days or 180 days.
The cost of transactions in this method is a bit lower, but it is a little risky. Here the bank does not provide any guarantee for payment. Moreover, there might be a possibility of not accepting a buyer’s document or making a bankruptcy. However, if there is a very good relationship between the buyer and the seller, transactions in such a manner are considered safe.
Draft letter of Credit
In order to avoid error in the original LC, the bank creates a draft LC before sending the original LC. When the draft LC is approved by the customer of importer, then the bank sends the original LC to the Exporter.
Dumping and Anti-dumping
When goods are exported at a lower price than the local market price, then it is called dumping. In many cases, exporters use dumping techniques in an attempt to capture the market.
In the starting of the business, exporters use low price techniques or dumping techniques to capture the market. In the dumping techniques, local producers or traders are affected. In this case, additional duty on imported goods is imposed by the government for adjusting the sale of local products and imported goods. Such duty is called anti-dumping duty.
Duty Free Import
The imports that are not imposed on duty are called duty-free import. In this case, for the import of certain products, the state offers duty-free access.
Duty Draw Back
Generally, custom duty to import raw materials (import duty) is required to produce a product. But to encourage the export of finished products, after the export is completed, the return of duty by the government is called Duty Draw Back.
E
Estimated Time of Arrival (ETA)
ETA / Estimated Time of Arrival is the date of arrival of any vessel / aircraft / cargo ship in which any port is available.
Estimated Time of Departure (ETD)
ETD / Estimated Time of Departure (ETD) is the possible date of shipping / aircraft / cargo for any destination after loading the product.
Export
Selling of any product to any foreign countries in exchange of foreign currency is called Export. Here, the main two parties are called Importer (Buyer) and Exporter (Seller).
Export Business plan
Export Business plan generally refers to make plan of how to prepare and start a company, identify the large, middle and small businesses and find out which one is best to enter in the international market. This plan also includes deciding of business product and all other step by step activities.
Export General Manifest
Prior to leaving the port, the list is exported to the customs authorities by the list of exported goods, called Export General Manifest (EGM). There are number of packages, product details, Consignee, Shipper, Air vendor bill or Bill of Ladder number. Export General Manifest (EGM) creates a transport company (Carrier) and submits to the Port Authority.
EXP Form
An EXP form or an Export form is a type of customs document that is issued by an authorized dealer (AD) branch of Bangladesh Commercial Bank for exporters. According to the Bangladeshi Export Law, a mandatory document for the export is EXP Form.
After getting the Export order, the exporter has to submit the EXP form prescribed by the bank and submit it to the bank. Then, attesting the bank form, the Bangladesh Bank enters the central server. Subsequently, customs authorities order exporting of products as per the details of the EXP form during the product shipments.
The EXP form is generally two copies. After one copy of the customs shipment is completed, the copy is verified and returned to the exporter or their authorized dealer and the original EXP copy is sent to the Bangladesh Bank.
Export Processing Zone (EPZ)
EPZ is a site in a foreign country which is established to facilitate and encourage international trade. It includes special economic zone, free trade zone, customs zone, free port and bonded warehouses.
Export License
Export License refers to Government document that specifies exporting of specific goods for some indicated countries, in specific quantities. It is a legal document. Exporter can’t export goods without this license.
Export Subsidies
Export subsidies includes incentives which Government gives to the exporters in order to encourage the export trade. It also includes the other benefits which are given by government to the domestic exporters.
Excise Duty
Auction VAT and other tax except Customs duty which is exempted to sell in the country is called Excise duty. In some cases, it is called Excise Tax.
F
FCL Cargo
FCL cargo or Full Container Load is a means of loading goods on a vessel, where a full container for renting a commodity is transported. For the shipments that the exporter hires a full container, load the FCL / FCL cargo or the flower container load
Feeder Vessel
In many cases, because of the size of Mother Vessel being very large and the portability of the port channel is low, these vessels can’t go and come up to the port.
In comparison, the small vessels that bring anchor to deep sea (outer) from Mother Vessel to the port are called Feeder Vessel. Generally, these vessels are capable of holding 1000 metric tons to 3000 metric tons.
Free Alongside Ship (FAS)
FAS is an incoterm among the 11 terms. It specifies the cost responsibility of importer and exporter. According to this term, the exporter handles the cost and importer handles the goods loading cost, transportation cost and insurance. The seller’s responsibility is to clear the goods of export and bear the cost of warehouse storage and packaging, loading on truck, inland freight, export duty and unloading of truck charge.
Free on Board (FOB)
In Free on Board (FOB) term for any export trade, after the delivery of the goods to the ship, all the costs have to be borne by the buyer, including the cost of ship rent, insurance, unloading costs, all the duties and taxes and all other costs of the Destination Port. According to the Incoterms 2010, this trade term is used only for shipping goods on the waterways. Free On Board (FOB) is a widely used trade term of international trade and also has great access to it in Bangladesh. However, prior to shipping, all the expenses such as stuffing, handling, port charging, etc. are to carry the seller or shipper.
Freight Prepaid
Freight prepaid is used in preparing the Bill of Lading when goods are transported through Sea port. Freight prepaid refers that the freight of the ship will be paid by the Exporter. Freight Prepaid word should be included in the bill of lading, otherwise there will create confusion of who will pay the freight of the ship.
Freight Collect
In the bill of lading, freight collect generally specifies who will pay the freight of the ship. Freight collect in the bill of lading refers that freight will be paid by the importer. Importer and exporter should decide that who will pay the freight and include it in the bill of lading. “Freight Collect” word should be included in the Bill of lading.
G
Gross Weight
Gross weight is the total weight of the entire ship transmitted to the ship, in which the weight of the exported net weight and packing material is included.
Grace Period
Grace Period is an extra time period for a loan term. it is the provision of loan and insurance contract which specifies payment to be received after a certain period of time. During this period, no late fees are charged.
H
House Airway Bill
When a Freight Forwarding Agent issues a transport document after getting the product against the booking by the Exporter, then it is called the House Airway Bill. Generally, the House Airway Bill is issued before the expiry of the export activities. After getting a product understanding, the receipt issued only as non-negotiable documents which are used only as references.
Hard Currency
Hard currency is a world currency or currency that has a global money-back value stable. As a result, the use of international trade is considered universally accepted and safe. Such as US Dollars, Euro etc.
HS Code
HS Code or Harmonized Coding System is an internationally recognized coding method, where import or export products are released through a special code. By using this code, products are classified according to this number. In a word, HS code is internationally recognized, known and used product identification number method.
I
Import General Manifest
Before anchoring the ship, the documents by which the customs authorities are informed about the goods is called Import General Manifest (IGM). This list contains the number of packages, product details, Consignee, Shipper, Airway Bill, or Bill of Ladder number. Generally, the Transport Company (Carrier) creates the Import General Manifest (IGM) and submits to the Port Authority. It is an important legal document for Port Authority.
Import Surcharge
In import of goods, import duty or excise duty charged or imposed by the government of the country is called import surcharges.
Import Duty
In the import of goods, the duty imposed by the government of the country is import duty or import duty.
Incoterms
Incoterms or International Commercial Terms are series of commercial terms published by International Chamber of Commerce, which are related to International Commercial Law. All shipping and other exporting transactions are done according to these terms.
Insurance Cover Note
Before the issuance of the original insurance certificate, the term insurance certificate issued by the insurance company is called an insurance cover note. Although it does not mention all the components of the insurance, it can accomplish all the shipment activities.
Insurance Policy
In Insurance Policy, all the terms of the insurance contract are explained in detail. It is considered as a legal document of insurance.
Intent
The letter which is sent by the importer or buyer to the exporting company by showing an interest to do business contract or deal is called a letter of intent. Generally, this document mentions product names, shipment types, payment methods, etc. primarily. It generally summarizes the main points of a proposed deal.
Invoice Value
Invoice Value generally refers to the products total value. It determines by multiplying products unit Price and quantities of products.
Irrevocable LC
All parties involved in LC (Beneficiary / Seller, Negotiating Bank, Confirming Bank, Appointment / Buyer), without the approval, can’t recall or terminate the LC is regarded as an Irrevocable LC or Irrevocable Letter of Credit. Currently, all LCs are irrevocable.
L
Lay Off
The lay-off is a term of industrial law. When a company stops work due to financial problems, workers are temporarily suspended. That situation is called lay off. However, according to the legal level, that institution is forced to pay lay off fee/wages to the workers.
Land Custom Post
Area of mode of shipment is called land custom post. For example- when the mode of transport is land, land custom post is Benapole. When the mode is sea, Land custom post is Chittagong Sea Port.
LCL Cargo
Loading of LCL cargo or Less Container Load is the means of product dispatches where partial rents are made without hiring a full container for exportable commodity transport.
For the shipments that the exporter leases part of the whole container, the goods are loaded by the LCL cargo or the Less Container Load. In that case, the shipment of multiple export products is possible in the same container.
Letter of Credit (LC)
Well, this is about Letter of Credit, which is called the international transaction paying document. Without Letter of Credit, international trade can’t happen. LC is a guarantee given by importer’s bank to the Exporter to pay the bill on behalf of his customers or importers. Issuing bank provides LC when importer has much reserve money in his bank account. In some cases, issuing bank issues LC without having much reserve money of importer if importer has so much fame in international business or by seeing his current economic conditions, his past international trades etc.
LC at Sight
Just presenting the appropriate shipping documents and after immediately paying the bank’s money (value) is called LC at Sight. However, in this case, the bank receives 05 working days for the examination of the document.
Letter of Credit Authorization Form (LCAF)
LCAF is the Opening Application Form of Letter of Credit. It is the internal process of the bank. For importing goods, the issue was made from the authorized dealer branch of Bangladeshi commercial banks, according to Import Policy Order. The application is sent to L / C with the approval of the bank. This indent letter is to be shown to the taxpayers for the import of the goods.
Loan against imported merchandise (LIM)
When a commercial bank pays money to a customer for being released the imported document, then it is called Loan against Imported Merchandize or LIM. This is a type of working capital loan. In most cases, imported products are accepted as mortgage.
LC Amendment
When a part of the letter of credit (LC) is modified or amended by the collective consent of the buyer and seller, then it is called LC amendment. However, in some cases, the need for amendment of the bank (LC Issuing or Confirming Bank) is required in addition to buyers and sellers.
Lighter Vessel
A small size vessel, which carries goods from Mother Vessel to the port and which is located on the outer anchorage is known as Lighter Vessel. Also known as the Vessel Barge.
Liquidity
Liquidity is the total amount of cash and cash worth of an organization through which the organization is able to fulfill its short-term liabilities or even unexpected liabilities. Liquidities should be available in both importer’ and exporter’s organization.
M
Marketing and D- Marketing in Export Business
Any kind of promotional activities which is done for informing people and consumers about the product and selling the product or service is called marketing.
Sometimes, many companies discourage buyer’s products or services through different steps if there is less production or supply than the demand for a service or product. Any organization taking this step is called D Marketing.
Master Airway Bill
After exporting the product which is booked by the forwarding agent, the transport document which is issued after the expiration of the export program by the carrier or the company of carrying goods is called the Master Air Way Bill (MAWB).
It is also a non-negotiable document like House Airway Bill. However, in some cases, the Master Air Way Bill can be made as Negotiable document.
Master LC
Master LC is an importer named LC, from which a back-to-back LC is opened. A new LC can be opened for the import of raw material by securing an LC. Then the LC is called the master LC, who has the security.
Material Safety Data Sheet
Material Safety Data Sheet or MSDS is an export document where details of potential risks (health, combustion, radiation, environmental etc.) of products and these possible risk avoidance methods are explained.
An MSDS usually has 16 parts. This is a required document for transporting Dangerous Goods (DG) (e.g. chemicals). Those parts are:
- Chemical Product and Company Identification
- Information of Ingredients
- Hazards identification
- First aid measures
- Firefighting measures
- Accidental release measures
- Handling and storage
- Exposure control/ personal protection
- Physical and chemical properties
- Stability and reactivity
- Toxicological information
- Ecological Information
- Disposal considerations
- Transport information
- Regulatory information
- Other Information
N
Negotiating Bank
The bank from which the exporter gets the value of the export product by presenting the shipment documents, the bank is called a Negotiating Bank. So, in general, Negotiating Bank is called Exporter’s Bank.
Negotiable Documents
Any Document for sale, whose ownership is transferable in exchange for price transfer is regarded as negotiable documents. These include Bill of Exchange, Bill of Lading, Cheque etc.
Net Weight
The weight of the product, without its packing weight is called Net weight.
Non- Negotiable Documents
Documents that are not sellable is called Non-negotiable documents, such as Copy of Shipping Document.
Nostro Account
If a bank account term, usually a local bank’s money is deposited in a foreign bank account, then in the foreign bank, the account of the local bank is called Nostro account.
In this case, the amount of the bank account is shown in the local currency of the foreign bank (e.g., US Dollar).
O
Offer Validity
Offer validity refers to that time or date up to which the export conditions such as payment condition and other product condition is valid. After that time, the conditions will be regarded as invalid.
Opening or Issuing bank
The Bank which issues Letter of Credit (LC) is called opening bank or issuing bank. It is also called importer’s bank.
Operating Cost
For managing an organization, all costs are known as Operating Cost. That means, the cost of survival of the organization, such as employees’ salaries, office rent, utility bills, cost of raw materials, cost of equipment maintenance, and other related expenses is operating cost.
P
Packing List
Packing list is a shipment document which includes the products description such as quantity, price and also indicates the type of package such as box, crate, carton, drum etc. Generally, buyer (Importer) specifies the packing system and seller (Exporter) determines price according to the packing system.
Partial Shipment
Partial shipments are permitted by the buyer or importer in the export business through different invoices. In this case, LC / TT has to mention the partial shipment Allowed. If the product quantity is 1000 metric tons and the local shipments are allowed in LC / TT, then the product can ship with four or five invoices. Export shipments of the same agreement, many shipments, or invoices through consignee, are called as private shipments. However, the permission for the Partial shipments must be mentioned in the agreement and the El LC.
Payment Bond
Payment bond guarantees all the payments that are due to subcontractors and others from the principal. In payment bond, the subcontractors are mainly the beneficiaries of the project.
Performance Bond
Bid bonds and performance bonds are the same in the context of Bangladesh. In other words, there are such bonds in Bangladesh.
By using performance bond, the contractor gives the guarantee to complete the contract according to its terms and conditions. If contractor fails, the owner will have to call upon the surety to complete the contract. In that case, the surety will elect new contractor to complete the project or give the owner the cost of completing the project.
Period of Presentation
After completing the export shipment, the period for the presentation of the documents mentioned in the loan form (LC) is called period of presentation. Usually this period is 21 days. However, considering the circumstances of the situation, its time may be less on the basis of consensus of buyers and sellers.
Port of Destination
Port of destination is also called port of entry. It is called import’s country port, where importer releases the products.
Port of Entry
From the port that the imported products enter in any country is called port of entry. From the entry port, importer releases the imported goods and fulfill the other formalities.
Port of Shipment
The port from where export product is shipped is called Port of Shipment. From this port, the shipment of product is started. It is also called export’s country port.
Proforma Invoice
Pro-Forma Invoice is a primary import-export contract between importers and exporters (sellers) before sending exported products; By mentioning the nature or type of product, quantity, value, weight, size and other details of the export, to the importer. This is the first step of the export business between exporters and importers. Exporter issues Proforma Invoice in his company letterhead (with signature and seal). The exporter prepares the information invoices in addition to the above information in his letterhead. After submitting it with other papers in his local bank, the bank submits the Proforma invoice to the importer’s bank.
Purchase Order
The buyer decides to order the vendor through the document and that document is called purchase document. Purchase Order is the first selling document. Here the details of the product, quantity, time of delivery, value, shipment medium, payment method and other conditions are written in a form.
Q
Quantity
Quantity is the amount or number of a product or material that is estimated by measuring the products or materials. The product’s total price is estimated based on the quantity.
R
Red Clause letter of Credit
Before the presentation of the document through the letter of credit (LC), the banker is said to pay the amount of advance, the Red Clause Letter of Credit (LC).
Re- Export
When the imported goods are exported in any country without processing or replacing it, then it is called re-export. Re-exporting is generally done when that importing products can’t produce or reprocess in that importing country or if reprocessing is too much costly in that country. Here, the first importing country is the exporter and any other country will be importer.
Reimbursing bank
After understanding all the documents of the letter of credit (LC), the bank that has paid money to the Negotiating Bank is called Reimbursing Bank. The reimbursing bank may be the issuing bank itself in some cases.
Revenue
Revenue is the amount of money that a person makes (income) during a given period through a general activity (sold).
Revolving LC
Instead of using different letter of credit (LC) for different shipments of the same buyer, when the same Letter of Credit (LC) is repeatedly used, it is called Revolving LC. This L / C value is revolved at any times.
S
SAFTA Certificate
SAFTA certificates are issued for export trade in SAARC countries. Through this certificate, the importers of SAARC countries receive the customs duty exemptions. Note that this facility is applicable only for certain products produced in this region. Export Promotion Bureau issues this certificate in Bangladesh.
Several banks of Letter of Credit agreement
In Letter of Credit agreement, there are several banks who handle all payment terms and other activities of LC besides importer and exporter. Those banks are: Advising bank, issuing bank, negotiating bank, Confirming bank, Reimbursing bank.
Shipping Documents
The documents that are required for shipping the exportable products outside the country is called shipping documents. These include Bill of Ladings, Airway bills, Truck receipts, etc.
Shipping Mark
Making a mark or sign that is used in packing the product when shipping the product is called a Shipping Mark. Generally, the customer name, address, country of origin etc., or details of the customer’s requirements are written.
Shipment Advice
When the product shipments are completed in the export trade, the exporter informs the importer of the message through the advisory. This message mentions the total value of the product, the weight, the details of the transport, the date of the departure, the possible date of arrival to the goods destination, the letter of credit (LC) etc. Send the buyer to the buyer (via e-mail or fax message) by the exporter as “Shipment Advice”.
Generally, copies of commercial invoice and packing list are sent with Shipping Advice. Again, in some cases a B / L copy and send.
Shipment Date
Shipment date generally refers to the starting time of shipment. When the ship starts from the board of the country or exporters country, that date is called shipment date.
Shipment Insurance
Shipment insurance is just like the regular insurance service where insurances are done for shipping products. This service reimburses the senders or exporters lose whose product has been stolen, damaged or lost. Generally, Postal services, courier companies and shipping insurance companies provide this insurance services. An important reminder for this case is that not all companies provide insurances of all products.
Sight Draft
The draft whose value is paid as soon as the draft is presented is called Sight Draft. It is also said as LC at sight or available by sight.
Soft Currency
Soft Currency is an internationally low-demand currency or currency whose international money market is unstable. As a result, the use of international trade is considered unsafe. Such as Bangladeshi money, Zimbabwean dollar, Iraqi Dinar etc. soft currency is used only to buy and sell goods within a country. Soft currencies are volatile because of its lack of liquidity in foreign reserve.
Stale B/L
After the expiry of the term of Letter of Credit (LC), the bill of lading is referred to as Stale B / L. Most of the time Stale B / L is rejected.
Standby Letter of Credit
Standby Letter of Credit (SLOC) is a special letter of credit, where the issuing bank guarantees the payment to the third party only in the failure of its subscriber. It can be used in domestic and overseas trade like ordinary LCs.
Under the letter of credit (LC), the issuing bank guarantees payment to the third party in its failure to pay the customer’s price, then it is called the standby letter of credit / Standby Letter of Credit (SLOC). This is a special letter of credit (LC) that is used in domestic and overseas trade.
Straight B/L
The Bill of Lading (BL), which directs the transfer of the product only to the consumer, is called Straight B / L. In other words, the shipping authority will only be forced to deliver the consignee.
This is a non-negotiable document and, generally, the Pre-Paid Payment (TT) system uses Straight B / L.
SWIFT
This is a secure communication network. Through which all money transmissions (basically banks) circulate throughout the world. Through its circulation, global financial transactions have become much safer, easier and quality.
T
Tax
Tax is that part of the income of a person or organization that is given to the revenue department of the government. The rate of payment of individual and organization taxes is different. But in every financial year, the government of Bangladesh re-determines the rate of tax.
Tariff
Taxes determined by the government on imported goods are called tariff or import duty. The government is used to establish control over the tariff or import duty imports.
Tax Holiday
When the tax is mortgaged in certain industries for the given time by the government, it is called Tax Holiday.
Telegraphic Transfer (TT)
Using a telephone phone to transfer money is a medium. It a payment method of Export business. But currently its use is limited. At present, all electric transfer swifts (SWIFT) are completed. Currently, all export transactions are conducted using LC method.
Technical Data Sheet
The Technical Data Sheet (TDS) has detailed information related to the product. It’s also called Spec Sheet or Data Sheet.
Third Party Inspection
A Third-Party Inspection means that the third-party people or company provides technical control, test, assessment and approval services or plant conducted with the purpose of certifying the compliance of purchased or ordered products or services/ plant to the international standard.
Tied Loan
The loan based on the given conditions is called a tied loan.
Time Draft
In Time Draft, the amount referred to (value) is paid on a fixed date after the presentation of the draft.
Tire Weight
The weight of an empty train or an empty container used in the product shipment is called Tire Weight.
Tolerance
Tolerance is that product mismatch level according to their contract up to which the importer doesn’t stop the shipment process. The level is generally included in LC clause. When level is crossed, importer stops the shipment process and contacts with exporter.
Trade Terms
Trade term is another name of Incoterms, according to which the shipment process is done.
Transferrable LC
The letter of credit (LC), with the consent of the issuing bank, can transfer the second beneficiary to the second beneficiary, then he will have a transferable LC. However, the matter of transfer is to be mentioned in the LC.
Transshipment
Transshipment is a way of shipping a shipping term or commodity where goods transfer from one ship to another in the middle of the shipment. This is usually done if the exporters and importers do not have the direct release port for imported goods, water or air in the two countries.
During the shipment, the transshipment is the process of transferring the invoice to another destination, on the route to the destination. Generally, if the importing country does not have any mode of transportation within the port of the importing country, then the transshipment facility can be taken. In some cases, transshipment is used to reduce transportation costs.
However, due to the risk of losing the product, the buyer or the importers are generally discouraged to do this shipment.
Truck Receipt
The ownership certificates of the goods exported on the land are known as truck receipt. It is used only for the truck export.
Trust Receipt
Trust receipt is one kind of short-term loan given to the importer to exempt the imported goods through letter of credit (LC). But in this case, the product is owned by the donor’s bank.
TT Number
TT or Telegraphic Transfer is a term used to refer and electronic means of transferring funds. This system is generally used in International Business transactions. TT number is generally given by bank, who are involved in TT transactions.
U
UCPDC/ UCP 600
The Uniform Customs and Practice for Documentary Credits (UCPDC) details the rules related to the LC made by the International Chamber of Commerce (ICC). The use of UCPDC lenders (LC) has been made public. Currently the sixth edition of UCPDC is known as UCP600.
Unconfirmed LC
The Letter of Credit (LC) which is guaranteed to pay the issuing bank only is called as an unconfirmed letter of credit (LC).
Unit Price
A unit price is the price of one item or measurement, such as a pound, kilogram, Tin, Container, Pint which can be used to compare the same type of goods and fix the total payment of products. It is varied as weights and amounts. For example- 3 containers total price 30 dollar, so 1 container is 10 dollars. These 10 dollars is called unit price.
Usance Credit
Usance Credit is another name of Deferred Letter of Credit (LC). When the buyer has paid the price after the specific time of accepting the Letter of Credit (LC) document, then it is called as Usance credit.
V
Value Added Tax (VAT)
VAT is a type of indirect tax that does not have to be paid directly by the consumer to the seller. It is usually imposed on the value of the product before the supply, which is included in the purchase price of a product or service.
Variable Cost
According to the proportion of the production or services produced by a business entity, the change in the production cost is called variable cost. In other words, If the number of productions is increased, then the extra cost of extra production increases in its variable cost. In export business, exporter fixes the price including those costs.
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