Advanced Trade Finance & Special Customs Procedures
Trust Receipt
Also known as: T/R
A trust receipt is a financing arrangement under which a bank that has paid for imported goods under a letter of credit releases the shipping documents to the importer so it can take possession and sell the goods, while the bank retains a security interest in them and in the sale proceeds until it is repaid. It lets an importer bridge the gap between receiving the goods and collecting from its own customers without first repaying the bank, effectively financing the inventory. The importer holds the goods in trust for the bank, which relies on the borrower's integrity and the value of the merchandise as security.
The goods are spoken for before they arrive. The bank releases documents so you can take and sell merchandise it still holds a security interest in — which matters if you were also planning to pledge it elsewhere.
Related terms
Reviewed by a licensed customs broker. Definitions are general information, not legal or customs advice for a particular shipment. Duty rates, tariff programs and agency requirements change frequently.