Trade Finance

Understanding trade finance solutions

What is it about?

Over fifty percent of all corporations are involved in cross border trade to one degree or another. Trading internationally is an important factor in stimulating a company’s growth strategy, competitiveness and profitability. There are however additional risks to be considered when buying and selling goods and services outside of the domestic market. This 2 day course takes a comprehensive look at how trade finance mechanisms and practices can be used to mitigate and manage the various risks in international trade, covering the needs of all parties’ involved in short, medium and long-term commercial contracts and both consumer and capital related goods and services.

Programme

Setting the scene – ‘Why trade finance?’

Commercial contracts and International Chamber of Commerce (ICC) Incoterms 2000

Financial documents

• The mechanics of bills of exchange and promissory notes
• Discounting bills and notes – improving cash flow
• Achieving transactional control
• Avalisation – mitigating payment risk
• Recourse and without recourse

Commercial documents

• Third-party inspection certificates
• Certificates of origin
• Waybills
• Mate receipts
• Bills of Lading

What is the value of documents of title?

Understanding payment risk in international trade – The Risk Ladder

Documentary Collections

• Appreciation of the mechanics
• Identifying the parties to a collection
• Raising short-term structured finance
• Outline of International Chamber of Commerce (ICC) URC 522

Documentary Credits

• Definition
• Process and mechanics
• Types – revocable, irrevocable, unconfirmed and confirmed
• Payment terms – sight, acceptance, deferred payment and negotiation
• Raising post-shipment finance – with recourse or without recourse
• Overview of International Chamber of Commerce (ICC) UCP 600 versus UCP 500

Handling and understanding documentary credits

• The negotiation stage – sales contracts v. the L/C contract
• Key checks when the L/C is receive
• Compiling documents and presenting to the banks
• Common problems and discrepancies
• Remedies for unpaid documents

The dynamics of a middleman operation

• Assignment of proceeds
• Transferable credits
• Back-to-back credits

Aiding the supplier – “special” credits

• Red clause letters of credit
• Green clause letters of credit
• Advanced payment credits
• Packing credits

Contract bonds and guarantees

• Understanding the purpose and mechanics
• The key common types
• Conditional and unconditional
• Complying with ICC Uniform Rules for Demand Guarantees URDG 758
• Guarantees and documentary credits working in tandem
• Risk considerations for banks

Transferring risks to the insurance market

• Commercial
• Political and Economic
• Short-term export policies
• Capital goods cover
• Access to finance

Standby letters of credit

• The difference between a standby credit and a bond/guarantee
• International Chamber of Commerce ISP 98
• Protocols and practices
• Appreciating the risks

Export credit agencies and medium/long-term finance

• Supplier credit finance
• Buyer credit finance
• Lines of credit

ECGD new product initiatives

• Access to export finance
• Credit insurance
• Bond and guarantee issuance support
• Foreign exchange hedging cover

Forfaiting

• Fixed rate
• Up front
• Extended credit
• Without recourse

Open account trade versus documentary settlement – the future:

• SWIFT TSU
• Bolero
• Bank assisted “open account”
• Supply chain finance

How do you benefit?

Completion of this programme will enable participants to

• Feel confident using trade finance jargon
• Understand classical trade finance mechanisms and instruments
• Identify and mitigate risks in international trade
• Sharpen credit quality and control
• Secure payment for cross-border sales contracts
• Consider a range of options for raising working capital finance
• Improve cash flow

Who is it for?

• Treasury and finance professionals
• Credit controllers and credit management team members
• Export sales and marketing
• Logistics and shipping personnel
• Purchasing/procurement managers/teams

Trainer

• Mike Skelton