Forfaiting Glossary

Glossary Items beginning with : I

ICC

International Chamber of Commerce

IFG : The International Factors Group

The global trade association that fully represents and promotes the interests of the factoring, invoice financing and asset based lending industry on a global basis.

IFRS

International accounting standards within the meaning of the IAS regulation 1606/2002 to the extent applicable to the relevant financial statements so that company accounts are understandable and comparable across international boundaries.

Import License

Importers in certain countries are required by their government or state bodies to obtain an import license, usually allocating foreign exchange to future payment obligations

Incoterms 2010

A set of Rules outlining the buyers and sellers responsibilities under domestic and international commercial contracts for the sale of goods. The rules are split in 2 groups

Group 1

Rules for any mode or modes of transport

  • EXW,
  • FCA,
  • CPT,
  • CIP,
  • DAT,
  • DAP,
  • DDP

Group 2

Rules for sea and inland waterway transport only.

  • FAS,
  • FOB,
  • CFR,
  • CIF

Indemnity

A sum paid by one party by way of compensation for a particular loss suffered.

Initial Seller

Under the URF, the seller that first sells the payment claim to the primary forfaiter; or a primary obligor that creates the payment claim and transfers it to the primary forfaiter.

Insurance Certificate

If the seller or beneficiary provides insurance in a trade transaction, the insurance certificate states the amount and type of cover.

Insurance Policy

It is not an uncommon practise for forfaiters and trade practitioners to insure transactions under Political Risk Insurance. Insurance coverage is usually given on 80% to 90% of a specific transaction.

Interest Rate Risk

The risk that a receivable or the value of a portfolio will decrease due to movements in interest rates. Whilst various forms of receivables discounted in trade and forfaiting have their face value reduced by the respective discount rate for the tenor of the period of the receivable to their present value and if the holder of such instrument does not match the funding period or buy a derivative hedge, then the receivable or portfolio will be exposed to interest rate risk.