Business, Legal & Accounting Glossary
A means of financing the sale of goods, particularly in international trade. It typically involves a commercial bank or merchant bank extending credit to a foreign importer whom is deemed credit worthy. An acceptance credit is opened against which the expert can draw a bill of exchange.
Once accepted by the bank, the bill can be discounted on the money market or allowed to run to maturity.
In return for this service the exporter pays the bank a fee known as acceptance commission.
A means by which international trade is financed. Under this arrangement, a bank (or an acceptance House) in the exporter’s country set up an acceptance credit facility (similar to a checking account) on behalf of a credit-worthy importer. The exporter may then draw on this account up to its limit. Also known as acceptance financing.
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This glossary post was last updated: 6th December, 2019