Forfaiting Glossary

Glossary Items beginning with : B

Bilateral Clearing Agreement

A trading agreement between two countries, neither of which has a hard currency, and in which transactions are entered in clearing units, instead of a fixed currency.

Bill of Exchange

An unconditional order in writing addressed by the drawer (exporter) to the drawee (importer) requiring the drawee to pay a sum of money to, or to the order of, a specified institution/person (payee) or to the bearer on demand or on a specified or determinable future date.

Bill of Lading

A document issued by shipping companies to the shipper as evidence of a contract of carriage, and pre-payment of freight charges for goods carried by sea and which also constitutes a document of title to those goods.

BIS : Bank for International Settlement

An international organization fostering the cooperation of central banks and international monetary policy makers.


Bank Payment Obligation. An undertaking issued by one bank to another that it will pay that bank if it receives data via electronic transmission which matches information held by it on the same obligation. Similar in some ways to a letter of credit but there is no presentation of documents only data. Governed by the Uniform Rules for Bank Payment Obligations published by the ICC.

Break Funding

Used in floating rate facilities whereby the settlement of a transaction takes place during an interest rate period and aims to compensate the parties for the difference between the LIBOR rate from the value date to the next rollover date, and the relevant funding rate for the loan. See Market Practice Committee Bulletin No. 7 for commentary on who takes the risk of break costs following a prepayment.


Used in facilities, loans and other forms of borrowing to represent a payment on the final maturity date.

Business Day

A day on which the parties to a transaction and their respective banks closing a transaction are open for business on the day that an act is to be performed in accordance with the rules applicable to such act.


An agreement to purchase products that will eventually be produced by the capital equipment supplied under the export sales agreement.


The party purchasing the payment claim, as defined in URF 800.