Trade Finance Glossary and Export Import Terms

Accounts Payable (AP) refers to the amount a business owes to its suppliers or vendors for goods and services purchased on credit. It is recorded as a short-term liability on the balance sheet and represents outgoing cash obligations.

Accounts Receivable (AR) is the amount of money owed to a business by its customers for goods or services sold on credit. It is treated as a current asset since it represents expected future cash inflow.

Accounts Receivable Financing is a financing method where businesses raise funds by using their unpaid invoices as collateral. It allows companies to access immediate cash instead of waiting for customers to pay.

An Airway Bill (AWB) is a legal document issued by an airline or freight forwarder that serves as a contract of carriage and receipt of goods for air transport. It contains details about the shipment, sender, receiver, and delivery terms.

Amortization is the process of gradually repaying a loan over a fixed period through scheduled payments that include both principal and interest.

Anti-Dumping Duty is a tariff imposed by a government on imported goods that are priced lower than their fair market value, to protect domestic industries from unfair competition.

A Balance Sheet is a financial statement that shows a company’s financial position at a specific point in time, including its assets, liabilities, and equity.

A Bank Guarantee is a financial assurance provided by a bank that ensures a beneficiary will receive payment if the applicant fails to fulfill contractual obligations.

A Bill of Lading is a legal document issued by a carrier that serves as a receipt of goods, a contract of carriage, and in some cases, a document of title in shipping.

Break-Even Point is the level of sales at which total revenue equals total costs, resulting in neither profit nor loss.

Bunker Adjustment Factor (BAF) is an additional surcharge applied by shipping carriers to account for fluctuations in fuel or bunker prices during ocean transportation.

CFR (Cost and Freight): CFR (Cost and Freight) is an international trade term under Incoterms where the seller is responsible for paying the cost of transporting goods to the destination port. However, the risk transfers from the seller to the buyer once the goods are loaded onto the shipping vessel.

CIF (Cost, Insurance and Freight) is an Incoterm where the seller pays for the cost of goods, shipping, and insurance up to the destination port. However, the risk still transfers to the buyer once the goods are loaded onto the vessel.

CIP (Carriage and Insurance Paid To) is an Incoterm where the seller pays for transportation and insurance of goods up to a specified destination. Unlike CIF, CIP can be used for any mode of transport.

CPT (Carriage Paid To) is an Incoterm where the seller pays for transportation of goods to a specified destination, but the risk transfers to the buyer once the goods are handed over to the first carrier.

Cargo refers to goods or merchandise transported by ship, aircraft, train, or truck from one place to another for commercial purposes.

A Cargo Manifest is a detailed document that lists all the goods being transported on a vessel, aircraft, or vehicle, including information about the shipment, consignor, consignee, and cargo details.

Cash Flow refers to the movement of money into and out of a business over a specific period. It indicates how well a company manages its liquidity.

A Certificate of Origin is an official document that certifies the country in which goods were manufactured or produced, often required for international trade.

A Commercial Invoice is a legal document issued by the exporter to the importer that details the goods being sold, including price, quantity, and terms of sale. It is one of the most important documents used in international trade and customs clearance.

A Consignee is the individual or organization that receives goods in a shipment. The consignee is typically the buyer or the party responsible for taking delivery of the cargo.

A Consignor is the person or business that sends or ships goods to another party, typically to a consignee. The consignor is usually the exporter or seller responsible for dispatching the goods.

A Container Freight Station (CFS) is a facility where cargo is consolidated (grouped) or deconsolidated (separated) before being loaded into or after being unloaded from shipping containers.

A Container Yard (CY) is a storage area within or near a port where full containers are stored before loading onto a vessel or after being unloaded.

Countervailing Duty is a tax imposed on imported goods to offset subsidies provided by foreign governments to their exporters, ensuring fair competition for domestic industries.

A Custom House Agent (CHA) is a licensed professional who handles customs documentation and clearance processes on behalf of importers and exporters.

Customs Clearance is the process of obtaining permission from customs authorities to import or export goods after fulfilling all regulatory requirements.

Customs Duty is a tax imposed by a government on goods imported into or exported from a country.

(Delivered at Place) is an Incoterm where the seller is responsible for delivering goods to a specified destination, but the buyer is responsible for import duties and taxes.

(Delivered at Terminal) is an Incoterm where the seller delivers goods to a specified terminal (port, warehouse, or depot), and is responsible for unloading them.

(Delivered Duty Paid) is an Incoterm where the seller bears all costs and risks, including transportation, duties, and taxes, until the goods are delivered to the buyer’s location.

Debt Financing is a method of raising capital where a business borrows money from lenders such as banks or financial institutions, with the obligation to repay the principal amount along with interest over a specified period.

A Delivery Order is a document issued by a carrier or logistics provider that authorizes the release of goods to the consignee or their agent at the destination.

Demurrage is a charge levied by shipping lines or port authorities when cargo or containers remain at the port or terminal beyond the allowed free time.

Depreciation is the systematic reduction in the value of a tangible asset over its useful life due to wear and tear, usage, or obsolescence.

Detention Charges are fees imposed by shipping lines when a container is kept by the consignee outside the port or terminal beyond the allowed free time.

A Dock Receipt is a document issued by a shipping carrier or terminal operator acknowledging that goods have been received at the dock for shipment.

Documentary Credit is a financial arrangement, commonly known as a letter of credit, where a bank guarantees payment to an exporter upon submission of specified documents that meet agreed terms.

Duty Credit Scrip is a certificate issued by the government to exporters that allows them to pay customs duties using the credit earned from export incentives.

Duty Drawback is a refund of customs duties paid on imported inputs that are later used in the production of goods that are exported.

An E-way Bill is an electronic document required for the movement of goods under the goods and services tax system, used to track shipments and ensure tax compliance.

Ex Works is an Incoterm where the seller makes goods available at their premises, and the buyer is responsible for all transportation, risks, and costs from that point onward.

Equity Financing is a method of raising capital by selling shares of a company to investors in exchange for ownership stake.

Export Compliance refers to the process of adhering to all laws, regulations, and documentation requirements related to exporting goods from a country.

Export Credit is financial assistance provided to exporters to support the production, shipment, or sale of goods to international buyers.

Export Credit Insurance protects exporters against the risk of non payment by foreign buyers due to commercial or political reasons.

Export Declaration is a formal statement submitted to customs authorities that provides details about goods being exported, including value, quantity, and destination.

Export Duty is a tax imposed by a government on goods that are exported out of a country.

Export Finance refers to financial support provided to exporters to fund production, shipment, and working capital needs related to export activities.

Export General Manifest is a document filed by the carrier with customs authorities that provides details of all goods loaded onto a vessel or aircraft for export.

Export Health Certificate is an official document certifying that exported goods, especially food and agricultural products, meet the health and safety standards of the importing country.

Export Invoice is a document issued by the exporter that provides details of goods sold to a foreign buyer, including price, quantity, and terms of sale.

Export Licence is an official authorization issued by the government that allows a business to export specific goods that are restricted or regulated.

Export Promotion Council is an organization established to support and promote exports from a country by assisting exporters with market access, policy guidance, and industry development.

FCA Free Carrier is an Incoterm where the seller delivers goods to a carrier or location specified by the buyer, after which the risk transfers to the buyer.

FOB Free On Board is an Incoterm where the seller is responsible for delivering goods onto a vessel, and the risk transfers to the buyer once the goods are loaded on the ship.

Financial Statement is a formal record of a company’s financial activities and position, including details of income, expenses, assets, and liabilities.

Fixed Cost refers to business expenses that remain constant regardless of the level of production or sales.

Forfaiting is a financing method where an exporter sells its receivables to a financial institution at a discount in exchange for immediate cash, without recourse.

Forward Contract is a financial agreement between two parties to buy or sell an asset at a predetermined price on a future date.

Freight Charges refer to the cost paid for transporting goods from one location to another by air, sea, rail, or road.

Freight Forwarder is a logistics service provider that manages the transportation of goods on behalf of exporters and importers.

Freight Rate is the price charged by a carrier for transporting goods from one location to another.

Full Container Load refers to a shipment where an entire container is used exclusively by one shipper for transporting goods.

Fumigation Certificate is a document that certifies that goods or packaging materials have been treated with chemicals to eliminate pests and insects.

GST on Imports refers to the Goods and Services Tax applied on goods brought into a country, treated similarly to domestic supply to ensure tax parity.

Gross Profit is the difference between total revenue and the cost of goods sold, showing how efficiently a business produces and sells its products.

Harmonized System Code is an internationally standardized system of classifying traded products using numeric codes for uniform identification.

House Bill of Lading is a transport document issued by a freight forwarder to the shipper, detailing the shipment of goods.

Icegate is the online portal of Indian customs that facilitates electronic filing of import and export documents and communication with customs authorities.

Import Compliance refers to adhering to all laws, regulations, and documentation requirements related to importing goods into a country.

Import Credit is a financing facility that allows importers to purchase goods from overseas suppliers with deferred payment terms.

Import Declaration is a formal statement submitted to customs authorities detailing the nature, value, and classification of imported goods.

Import Duty is a tax imposed by a government on goods brought into a country from abroad.

Import Export Code is a unique identification number issued to businesses that wish to engage in import or export activities.

Import Finance refers to funding solutions provided to importers to pay for goods purchased from international suppliers.

Import General Manifest is a document filed by the carrier with customs authorities that contains details of all goods brought into a country on a vessel or aircraft.

Import Invoice is a document issued by a foreign seller to the importer that details the goods sold, including price, quantity, and terms of sale.

Incoterms are standardized trade terms published by international bodies that define the responsibilities of buyers and sellers in global trade transactions.

Inland Container Depot is a facility located away from ports that handles customs clearance, storage, and movement of containerized cargo.

Inspection Certificate is a document issued by an authorized agency confirming that goods meet specified quality, quantity, and compliance standards.

Insurance Certificate is a document that provides proof that goods in transit are covered under an insurance policy against risks such as damage or loss.

Intermodal Transport refers to the movement of goods using multiple modes of transportation such as road, rail, sea, or air without handling the cargo itself during transfer.

Inventory Turnover is a financial metric that measures how many times a company sells and replaces its inventory during a specific period.

Invoice Discounting is a financing method where a business borrows money against its unpaid invoices while retaining control over sales and collections.

Invoice Factoring is a financing arrangement where a business sells its invoices to a third party at a discount in exchange for immediate cash.

Invoice Financing is a funding solution where businesses use their unpaid invoices as collateral to obtain immediate working capital from a lender.

Irrevocable LC is a type of Letter of Credit that cannot be modified or canceled without the consent of all parties involved.

Less Than Container Load refers to a shipment that does not occupy an entire container and is combined with other shipments in a single container.

Letter of Credit is a financial instrument issued by a bank that guarantees payment to a seller on behalf of a buyer, provided specified conditions are met.

Letter of Indemnity is a document in which one party agrees to compensate another for any loss or damage that may occur due to a specific action or situation.

Marine Insurance is a type of insurance that provides coverage against loss or damage to goods during transportation by sea, air, or land.

Master Bill of Lading is a transport document issued by the main carrier to a freight forwarder, covering the entire shipment.

Mate Receipt is a document issued by the ship’s officer acknowledging that goods have been received on board the vessel.

Net Profit is the amount of income remaining after deducting all expenses, taxes, and costs from total revenue.

Ocean Bill of Lading is a shipping document issued by a carrier for goods transported by sea, serving as a contract of carriage and proof of ownership.

Operating Margin is a profitability ratio that measures the percentage of revenue remaining after covering operating expenses but before interest and taxes.

Packing List is a document that provides detailed information about the contents of a shipment including quantity, weight, and packaging details.

Port of Discharge is the destination port where imported goods are unloaded from a vessel.

Port of Loading is the port where goods are loaded onto a vessel for export.

Post Shipment Finance is financial assistance provided to exporters after goods have been shipped, to bridge the gap until payment is received from the buyer.

Pre Shipment Finance is funding provided to exporters before shipment to support production, procurement, and processing of goods.

Pro Forma Invoice is a preliminary document issued by a seller to a buyer outlining the details of goods and estimated costs before the actual sale.

Profit and Loss Statement is a financial report that summarizes revenues, costs, and expenses over a specific period to determine net profit or loss.

Purchase Order Financing is a funding solution that enables businesses to fulfill customer orders by providing capital to pay suppliers before receiving payment from buyers.

Receivables Discounting is a financing method where businesses sell their receivables to a lender at a discount to access immediate cash.

Revenue is the total income generated by a business from its primary operations such as sale of goods or services before deducting any expenses.

Sea Waybill is a transport document used in sea shipments that acts as proof of receipt of goods and contract of carriage but does not serve as a document of title.

Shippers Letter of Instruction is a document provided by the exporter to a freight forwarder containing detailed instructions for handling and shipping goods.

Shipping Bill is a mandatory document required for exporting goods, filed with customs authorities for obtaining clearance.

Shipping Instructions are detailed guidelines provided by the shipper to the carrier or freight forwarder regarding how goods should be handled and transported.

Shipping Line is a company that owns or operates vessels used for transporting goods across sea routes.

Shipping Schedule is a timetable provided by carriers that outlines departure and arrival times of vessels or transport services.

Short Term Trade Finance refers to financing solutions that provide working capital support for trade transactions with a short repayment period.

Sight Letter of Credit is a type of Letter of Credit where payment is made to the seller immediately upon presentation and verification of required documents.

Standby Letter of Credit is a financial guarantee issued by a bank that ensures payment to the beneficiary if the applicant fails to fulfill contractual obligations.

Structured Trade Finance is a specialized form of financing designed to facilitate complex trade transactions by structuring funding around the underlying trade flows, assets, and risk profiles.

Supply Chain Finance is a set of financial solutions that optimize cash flow by allowing suppliers to receive early payment while buyers extend their payment terms.

TEU Container refers to a standard unit of measurement equal to a twenty foot container used to quantify cargo capacity in shipping.

Tariff Classification is the process of assigning a specific code to goods based on standardized systems to determine applicable duties and regulations.

Terminal Handling Charges are fees charged by port or terminal operators for handling containers during loading, unloading, and storage.

Tonnage refers to the total weight or carrying capacity of cargo, often used to measure shipping volume or vessel capacity.

Trade Credit Insurance is a policy that protects businesses against the risk of non payment by buyers due to insolvency or default.

Trade Finance refers to a range of financial products and services that facilitate domestic and international trade by bridging the gap between buyers and sellers.

Trade Loan is a short term loan provided to businesses to finance the purchase or sale of goods in trade transactions.

Transit Time refers to the total time taken for goods to move from the point of origin to the final destination.

Transshipment refers to the transfer of goods from one vessel or mode of transport to another during the journey to the final destination.

Variable Cost refers to expenses that change in direct proportion to the level of production or sales.

Working Capital is the difference between a company’s current assets and current liabilities, representing its ability to meet short term obligations.

Working Capital Finance refers to funding solutions that help businesses manage their short term operational expenses and liquidity needs.