Forfaiting Glossary

Glossary Items beginning with : C

Collection Order

The set of instructions given by the exporter to the Remitting Bank and relayed by them to the Collecting Bank.

Commercial Interest Reference Rates or CIRR

Interest rates applied to loans supported by ECAs and fixed pursuant to the OECD Consensus. ECAs will then compensate lenders for the difference between the CIRR and any higher open-market rate

Commercial Invoice

Similar to a normal invoice, whereby details of the goods and/or services being provided are described with some detail. This international document is used for customs to determine on how to classify a product, set controls on what is important and calculate any duties.

Commercial Risk

The risk of non-payment by a non-sovereign or private sector buyer or borrower arising from default, insolvency, and/or failure to take up goods that have been shipped, according to the supply contract.

Commitment Fee

A charge made by the forfaiter for undertaking to forfait a transaction and to hold a discount rate and funds for a specified period of time. The Forfaiter will apply the commitment fee from the date of a firm commitment until the disbursement date, or payment date.

Comprehensive Coverage

Insurance or guarantee cover for all or a negotiated portion of the export transactions of a supplier (exporter) or bank. These policies generally provide insurance at a lower premium rate than specific policies, as the risks for the agency are spread across a broader range of transactions.

Confidentiality Agreement

A document signed by a party receiving information classified as confidential in relation to a company, project or other financial information that is not public information. There are many forms of Confidentiality Agreements however the ones most used in loans is the one published by the Loan Market Association.The Loan Market Association is the trade body for the EMEA syndicated loan market and was founded in December 1996 by banks operating in that market. Its aim is to encourage liquidity in both the primary and secondary markets by promoting efficiency and transparency, as well as by developing standards of documentation and codes of market practice, which are widely used and adopted.

Confirming

In relation to Letters of Credit, the practice of banks adding their separate undertakings to those of issuing banks and assuming liability for inspecting documents and making payment to Beneficiaries.

Consignee

The person to whom goods or title to goods are to be delivered.

Contingent Liability

A potential liability which crystallizes into an actual liability on an entity’s balance sheet once various uncertainties have been resolved. A contingent liability is not yet an actual, confirmed liability.