A B C D E F GHIJ KL MNO PQ RS TUV WXYZ

Account
Party/Accountee/Applicant/Openers
The person or entity who gives instructions to issue a Letter of Credit and who is therefore liable for any payments effected under the credit. In Trade Letters of Credit it is usually the buyer of goods and services.

Account Party
The buyer under a Letter of Credit. The party ultimately responsible for reimbursing the issuing bank for all payments extended on its behalf.

Advised Credit
A Letter of Credit whose authenticity has been verified by a bank generally in the beneficiary's location. This bank then advises the beneficiary of the Letter of Credit but does not take on any payment obligations.

After Sight
When a draft bears this phrase, the time begins to run from its acceptance date.

Air Waybill
A receipt and contract signed by an airline company or its authorized agent signing as the carrier for the transport of merchandise to a specific place of destination. By its nature an Air Waybill is not a negotiable instrument. It is a common requirement that the Air Waybill show the flight number and date.

Assignment of Proceeds
An acknowledgement by a paying/negotiating bank issued at the request of the beneficiary of the credit to pay a third party for services rendered or goods sold under a separate contract. It conveys no engagement on the part of the bank making such an acknowledgement and payment is only made if and when funds have become available under the credit.

Bank Draft
An order to pay on demand; a draft drawn on one bank by another. It is used to transfer funds and to settle outstanding balances between banks, or to provide a customer with funds payable at a bank in a distant location.

Bankers Acceptance
A time draft drawn by a party (the beneficiary if issued under a Letter of Credit), drawn on and accepting bank will be the same as the bank the draft is drawn on. However, this is not a requirement and a draft drawn on one bank can be accepted by another bank. In this situation the beneficiary would look to the accepting bank for payment at maturity.

Acceptance of the draft is accomplished by writing the word "Accepted" across the face of the draft followed by the date and signature of a duly authorized signer of the drawee bank. By accepting a time draft, a bank denotes its commitment to pay the face amount to the rightful holder who presents it at maturity or to pay the draft at a discount if presented prior to maturity. Bankers Acceptances are subject to various strict Federal Reserve regulations.

Back to top

Beneficiary
The person(s) or entity in whose favor a credit is issued. In Trade Letters of Credit it is usually the seller of merchandise.

Bid Bond
A financial guarantee given in support of the obligation of a bidder to sign a contract if he is successful in his bid.

Bill of Exchange
See Draft.

Bill of Lading
A document signed by the captain authorized agents or owner of a vessel as a contract for the transportation of merchandise from a named point or points to some other point or points of destination. It is both a receipt and a contract for delivery of merchandise.

Canadian Lockbox
Offered as a special service to corporations to speed up the collection of their receivables; allows corporations to direct their Canadian customers to mail payments to a Canadian bank rather than to the U.S.

Cargo Receipt
A receipt issued by a freight forwarder or other shipping company which signifies taking in charge and receipt for shipment of merchandise and which may indicate future routing of the shipment.

Cash Against Documents (CAD)
A method of payment for goods in which documents transferring title are given to the buyer upon payment of cash to any intermediary acting for the seller, usually a commission house.

Cash In Advance (CIA)
A method of payment for goods in which the buyer pays the seller in advance of the shipment of goods. Usually employed when the goods are built to order, such as specialized machinery.

Certificate of ...
The list of certificates, which may be required, is endless. The common denominators of any such certificates are: Issued by beneficiary or independent body of authority as specified in the credit, dated, signed, referencing the credit transaction and stating appropriately what is being certified to for example: inspection, analysis, health, compliance, manufacture, etc.

Certificate of Origin
A signed statement required in connection with shipments of merchandise from one country to another for tariff purposes or simply for confirmation of the origin of the goods. Usually it is required that such a statement be made by a specific independent party like a Chamber of Commerce. For some countries the signature of the consul of the importing nation may also be required.

Charter Party
A contract to hire or lease a vessel or aircraft for the transportation of goods for a specific voyage/flight. The terms thereof normally differ from those prevailing for the regular carriage of cargo by a liner vessel. Under ICC, UCP 400, Charters are prohibited unless specifically allowed under the credit.

Back to top

Clean Draft
A sight or time draft (bill of exchange) which is not accompanied by additional documents.
Our Letter of Credit and Collection services are excellent tools for handling international trade transactions.

Collections - Check and Documentary
Two banks acting as agents for their respective customers in obtaining final payment of an item or shipment of goods.

Commercial Invoice
A statement prepared and signed by the beneficiary on his/her own letterhead, addressed to the applicant of the credit, showing a detailed and itemized listing and description of merchandise sold, including prices and terms. Some credits require that the original and copies of the invoice be stamped and signed by the Consul of the importing country, such as a visaed commercial invoice. The original invoice should always specifically be marked as an "Original" and be labeled as an "Invoice."

Commissions
A bank charge for providing the various services under a Letter of Credit. Common commissions are assessed for preadvising, advising, confirming, amending, transferring, assigning and negotiating Letters of Credit, or accepting drafts.

Consignee
The person or company to whom a seller or shipper of goods addresses the consignment.

Consignor
The person or company quoted in the transport document as the shipper of the merchandise.

Consular Invoice
A detailed statement prepared by the seller on a form obtained from the consulate of the importing country which indicates the price, description, cost breakdown and other details of the merchandise. It is then submitted to the consulate for its official visa.

Containerized
When merchandise is not shipped "in bulk" or loose cartons (breakbulk), it is shipped in containers provided by the shipping industry. The preferred shipping mode today is containerized shipments.

Customhouse Broker
A person or firm licensed by the U.S. Treasury Department, engaged in entering and clearing goods through customs. The duties of a broker include preparing the entry blank and filing it; advising the importer on duties to be paid; and arranging for delivery to the client, the client's trucking firm, or other carrier.

Customs Invoice
A special form prepared by the shipper furnishing information about the merchandise for U.S. or other customs purposes. A specific form number may be required to be completed for certain types of goods imported. Customs may require that such invoices also bear a visa stamp.

Delivery order
A written, signed and dated order to deliver merchandise, which may be issued to or by a warehouse, a railroad company, a steamship company or airline, or anyone who has authority and legal right to claim or order delivery of goods.

Demurrage
The amount paid to the master or owner of a vessel for its detention beyond the time allowed for unloading or loading. The charge assessed for storage of the merchandise at the port, beyond the time allotted by the shipping company.

Discount
(A) Commercially, an allowance from the list price of goods, made usually by the deduction of a certain percentage from the invoice price. Such discount must be specifically allowed in the Credit.
(B) Financially, a deduction from the face value of commercial paper or Bankers Acceptance in consideration of receipt by the holder of cash before maturity of the instrument.

Back to top

Dock Receipt
A signed and dated receipt issued by an ocean carrier or its authorized agent for merchandise delivered to its dock or warehouse awaiting loading on board a vessel.

Documentary Credit
A commercial Letter of Credit providing for payment by a bank to the named beneficiary, who is usually the seller of merchandise, against delivery of such documents as may be specified in the credit.

Documents
The shipping and other papers customarily attached to foreign drafts, consisting of Ocean Bills of Lading, Marine Insurance Certificates, and Commercial Invoices. Where required, Certificates of Origin and Consular Invoices are included.

Draft
A written, signed and dated order from one person to another, including a bank, to pay a sum of money to a specific party.

Drawee
The person or entity on whom a draft is drawn by the drawer.

Drawer
The party who draws or issues the draft. In a Letter of Credit it is the Beneficiary.

Eurocurrency
Currency that is outside its "native" country, not necessarily of European origin, but limited to major currencies that are freely convertible and in high demand.

Eurodollars
The term of U.S. dollars held on deposit or traded anywhere else in the world.

Endorsement
A signature on the reverse of a negotiable instrument made primarily for the purpose of transferring the rights of the holder to some other person. It is a contract between the holder and all parties to the instrument. Each endorser orders the prior parties to fulfill the contract to his/her endorsee, and also agrees with the endorsees that if they do not fulfill the contract, he/she will.

Expiration Date or Expiry Date
The final date upon which the drawing of drafts or presentation of documents under a credit may be made at the place of presentment indicated in the credit. If such a date falls on a holiday at the place indicated, an automatic extension to the next business day is granted.

FCIA Insurance
Commercial and political risk insurance coverage for exports offered by the Foreign Credit Insurance Association.

Factoring
Short and medium term financing of business transactions, in which the factor assumes responsibility for the credit, collection and record keeping functions for the client.

First of Exchange
The original copy of a draft/bill of exchange, when two or more are drawn.

Foreign Currency Denominated Check processing
A check drawn on a bank outside of the United States that we buy and deposit to our customer's account at the current market rate.

Foreign Exchange
A general term applied to transactions between principals involving the purchase and sale of currencies. When a Letter of Credit is issued in a foreign currency, and the U.S. dollar equivalent is to be predeterminable, the applicant must purchase a separate contract for that currency, preferably with the bank issuing the credit. It is advisable that the Foreign Exchange Department be consulted for assistance.

Foreign Trade Zone
A free port in the United States divorced from customs authority but under Federal control. Merchandise, except that which is prohibited, may be stored in the zone without being subjected to the United States tariff regulations.

Forward Transactions
Foreign exchange transactions that take place sometime between three days and one year (and sometimes longer).

Freight Forwarder
Freight Forwarders, who are subject to regulations by the Interstate Commerce Commission, are defined by that commission as persons, other than carriers, who in the performance of contracts to transport property for the general public employ the services of rail, water, and other carriers. Freight Forwarders act on behalf of the shipper, and when retained for this purpose, attend to all the necessary details of shipping and documenting for the manufacturer or exporter, or vice versa, for the shipper and importer.

Hedge
A transaction to protect against fluctuation of foreign exchange rates by locking in a future exchange rate.

In Bond
A term applied to the status of merchandise admitted provisionally to a country without payment of duties, either for storage in a warehouse or for transhipment to another point where duties will eventually be imposed.

Back to top

Incoterms
A set of international rules for the interpretation of the common sales terms used in foreign trade associations and published by the International Chamber of Commerce in its 1980 Edition. This publication supersedes the "Revised American Foreign Trade Definitions - 1941," which was adopted by a Joint Committee of Chamber of Commerce of the U.S., the National Council of American Importers, Inc., and the National Foreign Trade Council, Inc.

Installment Shipments
Successive shipments permitted under Letters of Credit. Usually, they must take place within a given period of time. If not shipped within that period, the credit ceases to be available automatically unless otherwise authorized in the Letter of Credit.

Insurance Certificate
A document indicating that insurance has been placed under an open policy. Such an open policy usually covers numerous shipments over specified periods of time. Insurance Certificates issued under such a policy are then issued for a particular shipment and are usually issued in negotiable form, losses being payable to order of the holder. Most commonly it is issued for 110% of the C.I.F. value.

Insurance Policy
A contract of indemnity designed to reimburse an insured party for the financial loss he/she may suffer because of loss or damage to merchandise shipped under a specific contract, unique to a particular shipment of goods.

International Drafts
A check available in foreign currency or U.S. Dollars drawn on a bank outside of the United States.

International Wire Transfers
- Available in foreign currency or U.S. Dollars
- We have access to more than 7,000 financial institutions worldwide

Irrevocable
This most common instrument of credit in international trade, carries an irrevocable obligation of the issuing bank to pay the beneficiary when drafts and documents are presented in accordance with the terms of the Letter of Credit. An irrevocable Letter of Credit, once issued, cannot be amended or cancelled without the agreement of all named parties. It must have a fixed expiry date.

Our Letter of Credit and Collection services are excellent tools for handling international trade transactions.

Letter of Credit - Irrevocable and Revocable
A document stating that a bank guarantees that the account of a customer will pay a beneficiary when all terms and conditions have been complied with.
- Import Letter of Credit
Issued by Johnson Bank at the request of our customer, who will be receiving merchandise from outside the United States
Export - Letter of Credit
Issued by an international correspondent bank on behalf of their customer to pay our customer for merchandise shipped outside the United States
- Standby Letter of Credit
Issued by Johnson Bank at the request of our customer and is used on both a domestic and international basis . Generally, this Letter of Credit is a guarantee of a customer's obligation pursuant to an agreement or contract between two parties

Master Air Waybill (MAWB)
An air waybill issued by an airline, not a freight forwarder. MAWB refers to the air waybill governing all HAWBS on a consolidated air shipment.

Maturity Date
The date on which negotiable instruments become due for payment. Acceptances maturing on a non-business day are payable either before or after such date.

Open Account
Under an open account arrangement, the seller ships merchandise to the consignee in the foreign country with no guarantee of payment. Unless the buyer is of unquestionable integrity an open account can be risky to the seller.

Open Policy
An insurance policy, which allows the cover of all shipments, made by the insured party under established circumstances from its inception date until cancelled. The insured party is required to declare all shipments to the underwriters and to pay the required premiums at agreed upon rates.

Packing List
A statement prepared by the seller for shipments of more than one packaging unit, indicating which items are packed in each container and other details, such as markings on the boxes for identification and distribution purposes at the destination.

Back to top

Partial Shipments
Under letters of credits, one or more partial shipments are allowed unless specifically prohibited.

Performance Bond
A bond supplied by one party to protect another against loss in the event of default of an existing contract.

Pre-Advice
A preliminary advice of a Letter of Credit, usually in the form of a brief authenticated wire message which is not an operative instrument and which should be followed by the full detail Letter of Credit promptly.

Proforma Invoice
An invoice sent in advance of shipment, usually to enable the buyer to obtain an import permit or foreign exchange permit, or both. The proforma invoice gives a close approximation of the weights and values of the shipment to be made.

Purchase Order
A sales contract made between buyer and seller, issued by the buyer of the goods, which specifies the details and terms of the purchase. The purchase order may be referenced in the credit, but rarely forms an integral part thereof.

Pure Food and Drug Clause
A notification by the U.S. Food and Drug Administration (FDA), stating that certain merchandise being imported has satisfactorily passed inspection. Letters of Credit for such goods usually carry a condition that payment will be made upon receipt of such notification and that documents be released to buyer against a signed Trust Receipt.

Revolving
An irrevocable letter is issued for a specific amount, which renews itself for the same amount over a given period. Usually the unused portion of each period is non-cumulative and cannot be carried over to the next period.

Sanitary and Health Certificate
Signed statement by a Health Organization certifying the degree of purity, cleanliness or spoilage of merchandise or certifying the health of live animals.

Shipper's Export Declaration
A statement prepared for the U.S. Government on a specific form, used for statistical purposes, which lists the merchandise being exported from the U.S.

Sight Draft
A draft payable upon presentation of the required documents to the drawee, which allows for immediate payment, provided all terms have been complied with.

Spot Transactions
Foreign exchange transactions that take place within two working days.

Tenor
The term fixed for payment of a draft at a future date.

Third Party Shipper
When a party different from the beneficiary of the Letter of Credit is shown as the shipper of the goods on the transport documents. Unless specifically prohibited in the credit, third party shipper is allowed.

Time Draft
An order in writing payable at a fixed or determinable future date. Example: A draft drawn at "180 days sight" on the First National Bank of Minneapolis means that payments will be made by First Bank Minneapolis or its designated agent on the 180th day from the date that First Bank Minneapolis has determined that documents comply with the terms of the Letter of Credit and has accepted the draft.

To Order
A term which denotes transferability and negotiability of a title document or a negotiable payment order.

Trade Acceptance
The act of a buyer accepting and signing a time draft.

Transferable Letter of Credit
A credit whereby the beneficiary is allowed to request transfer of the credit in its entirety or portions thereof to another beneficiary (transferee). A credit may be transferred only once, that is, the transferee may not again transfer the credit to another party.

Transfer Credit
A transferred portion of a Letter of Credit giving drawing rights to a new beneficiary in accordance with the terms of such Transfer Credit.

Back to top

Transhipment
The transfer and reloading of goods during the transport from the initial point of loading to the final point of destination either within the same mode of transport or onto another mode of transport. Such transhipment is allowed in the credit unless specifically prohibited, provided it is covered by one and the same transport document.

Truck Bill of Lading
A non-negotiable bill of lading for domestic transport. The bill is issued in one original only if it evidences a contract for delivery of the goods (in either "long form" or "short form"), a receipt for the goods, and title to the goods, but no rates or freight charges are shown. However, any party may sign at destination on behalf of the consignee unless "signature service" is required by the shipper, in which case only the party named as consignee may endorse the bill of lading. In addition, insurance may be offered as in air waybills.

Trust Receipt
An engagement signed by a buyer of merchandise against which a bank or other entity releases title documents for the purpose of sale or inspection, but where the bank retains title thereto. The buyer is obligated to maintain the identity of the goods distinct from the rest of assets and hold them subject to repossession by the bank, or payment of representative value. Trust Receipts are subject to the guidelines set forth in the local Uniform Commercial Code.

Unclean Bill of Lading
One in which a notation has been made by the carrier of any defects found in the goods when they are received for transporting.

Usance
Same as Tenor.

Warehouse Receipt
A negotiable, signed and dated receipt issued by a warehouse for goods received for storage in the name of a designated person or to order.

Without Recourse
A phrase followed by the signature of a drawer or endorser of a negotiable instrument, whereby liability is disclaimed to subsequent holders in the event of non-payment. Such an endorsement constitutes a warranty of the genuineness of the instrument prior to the endorsement.

Back to top

MEMBER FDIC