Forfaiting Glossary

Glossary Items beginning with : T

Tax

Any tax, levy, impost, duty or other charge or withholding of a similar nature including any penalties which have to be paid to a government of a country.

Tenor

The amount of time left for the repayment/maturity of a receivable or the initial term length of an obligation. Tenor can be expressed in years, months or days.

Trade

The action of buying and selling goods or services in exchange for money. International Trade takes this action across borders. In most countries, such trade represents a significant share of Gross Domestic Product (GDP). There are a number of ways in which banks specializing in trade finance and forfaiting can help their clients trade by providing services through the discounting of Trade Receivables.

Trade Date

The date of the forfaiting agreement or the date on which the seller and buyer agree the secondary sale terms, as defined in URF 800.

Trade Receivables

Dues from debtors for goods sold or services performed in the ordinary course of business. Trade Receivables could be in the form of letters of credit, invoice receivables, promissory notes, bills of exchange, guarantees and other instruments evidencing such dues.

Trading

The act of selling Trade Receivables, usually to a bank who purchases them on a “with” or “without recourse” basis. To trade such receivables in the forfaiting market, the purchase of the future payment obligations would be on a “without recourse” basis. URF 800 explains the mechanism of creating and therefore trading a forfaiting transaction in the secondary market.

Transfer Risk

The risk of an inability to convert local currency into the currency in which a debt is denominated.

Transferable Credit

A credit which allows the beneficiary to transfer part, or all, of the credit rights to a third party, or parties, if part shipments are allowed.

Transit Credit

Where a bank in a third country acts in an intermediary capacity between the issuing bank and the advisory bank.