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Advanced Trade Finance

Agenda Program
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Location
Prague, NH Hotel Prague
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Price
N/A
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Lecturer
N/A
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Language
English
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Evaluation
N/A
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Trade Finance Products and Services
International Payment Methods and Risk Matrix
Documentary Letters of Credit and Contract Guarantees
Supply Chain Management and Trade Cycle
Incoterms® Rules, Export Documents and Procedures
Risks and Potential Mitigants in International Trade
Trade Report, Pre-Export Finance and Credit Insurance
Course Description
The course will provide an insight into importers & exporter's perspectives, covering key drivers for clients as well as the factors which would be taken into consideration during a client's decision making process. The modules of the course will help delegates form an enhanced analysis of a client's trade business.

The sessions will assist in the delegate's understanding of trade cycle/s and the inherent risks, documentation, trade terms and funding requirements. A key aim is for all delegates to be able to draft a diagrammatical representation of those trade cycles and be able to articulate the essential components.

Learning Objectives
The main objective is to provide delegates with an increased knowledge in Trade Solutions & Trade Finance which will strengthen their engagement in Q & A with existing/target clients and help them develop their own business. This will be achieved by the delegates having a greater awareness and understanding of their own and their client's current processes and being therefore able to link responses to potential Trade / Trade Finance opportunities, demonstrating a greater degree of confidence in client discussions.

Methodology
The course will allow discussion and debate around both client and bank risks including some potential mitigants for both parties and assist delegates increase sales into current portfolios and attract clients to the bank.

Program of the seminar: Advanced Trade Finance

The seminar timetable follows Central European Time (CET).

09.00 - 09.15 Welcome and Introduction

Trade Finance Solutions

An interactive day appropriate for all levels of experience including those who are relatively new to international trade and also for those requiring a refresher or update with regard to procedures, risks and mitigants associated with trade finance solutions.

Session 1: Introduction & Breakout session

  • Main objectives - Thought provoking icebreaking session involving delegates considering the key risks facing importers and exporters.
    • Buyer risk, Supplier risk, Political/economic/sovereign risk, Performance risk, Bank risk & Foreign Exchange risk implications.

Session 2: International Payment Methods

  • Main objectives - Establish understanding of the 4 fundamental methods of payment used globally by importers & exporters. When and why they are used - benefits & potential disadvantages to traders & banks discussed.
    • Advance payment, Open Account, Documentary Collections & Letters of Credit.
    • Documentary Collections - as a precursor to Letters of Credit - an interactive group activity using a bank schedule, money and documents. D/P & D/A - full explanation of the implications for sellers & buyers. URC 522 - brief explanation of the salient articles.

Session 3: Documentary Letters of Credit (& variations on Letters of Credit)

  • Main objectives - This highly interactive and participative session will equip delegates with a very practical appreciation of how Letters of Credit work, their benefits to financiers and clients (both buyers & sellers) and the definitive roles and responsibilities of the banks.
    • Introduction - how Letters of Credit work, when they are used and consideration given to up to the moment examples of their usage by buyers & sellers.
    • Roles and responsibilities of all parties to a Letter of Credit.
    • Uniform Customs & Practices for Documentary Credits (UCP 600) and International Standard Banking Practice publication 745 - very recently revised guidelines on how banks should interpret UCP 600.
    • Group Exercise - Delegates to work in groups examining a set of documents against a Letter of Credit. Are the documents compliant or do they conflict to the terms of the Letter of Credit?
    • Variations of Letters of Credit - overview of Standby Letters of Credit, Transferable Letters of Credit, Back-to-Back Letters of Credit and Revolving Letters of Credit . Up to the moment examples of each type of Letter of Credit shared & discussed with delegates.

12.00 - 13.00 Lunch

Session 4: Trade Finance in practice

  • Main objective - to cover a number of structured trade finance solutions which are commonly used by banks/financiers around the world to help facilitate trade and also assist with risk mitigation. Examples will help facilitate discussion and debate around the risks and potential mitigants in the use of these trade solutions for clients and banks/financiers. This session will also include a section on the risks of Fraud & Trade Finance/double funding risks.
    • Trade Loans for importers - the benefits for traders & financiers.
    • Import Letters of Credits - Early Settlement Discount clauses - benefits for importers, exporters and banks.
    • Retiring Import Collections to Trade Loan - benefits to all parties.
    • Export Collections - no facilities required.
    • Export Collections - Advances against Export Collections - overlooked by many banks!
    • Export Letters of Credit - discounting Bills of Exchange for usance items.
    • Export Letters of Credit - Commitment to Negotiate/Silent Confirmation facilities.
    • Export Letters of Credit - Pre-shipment advances to beneficiaries.
    • Discounting against Avalised Bills of Exchange & Invoice Discounting.
    • Transferable Letters of Credit
    • Back-To-Back Letters of Credit
    • Red Clause Letters of Credit

Session 5: Contract Guarantees & Bonds

  • Main objectives - to enable the delegates to appreciate the underlying commercial and financial risks associated with the issuance of contract guarantees together with an understanding of the various types of guarantees that are required and why and when clients will need these items.
  • Why use Contract Guarantees & Bonds? this session highlights the rationale behind the requirements of clients for a financier to issue contract guarantees. There is an ever increasing demand for contract guarantees in the global marketplace, so it is essential that delegates understand why they need to be issued.
  • Types of Guarantees - There are a number of commonly used types of guarantees and these are all covered in this section with a number of practical examples, including discussion on potential pitfalls for the client.
  • Uniform Rules for Demand Guarantees (URDG 758) - issued in July 2010, these excellent, but sadly little used rules are gradually becoming adopted globally by an increasing number of banks. This session covers the key articles and compares these to UCP 600 where is much synergy.
  • Case study - group activity involving examining some wording to consider its suitability.

Session 6: Introduction & Breakout/icebreaker session (will test learning from Day 1)

  • Brief learning recap of Day 1
  • Group activity - discuss and list advantages and disadvantages of Letters of Credits for buyers, sellers and financiers.

Session 7: The Importance (to banks/financiers & their clients) of shipping documents

  • Main objectives - Emphasizing the importance, functions and value of documents to a financier and a client. Banks often call shipping documents �the raw materials of trade" for a bank/financier.
    • Delegates will handle bills of lading, air waybills, commercial invoices, packing lists & certificates of origin helping them familiarize themselves with these essential elements of trade.

Session 8: Understanding a client's Trade Cycle

"A Trade Cycle is a representation of the length of time that various key elements take to happen in a client's importing and exporting activities. It represents a graphic cornerstone/building block in terms of a bank/financier's understanding of the client's international business and working capital requirements".

  • Understanding the trade cycle - delegates will be given a client scenario, and given time to absorb the details and prepare for a meeting with the client. The facilitator will role play the client, and the delegates are required to work in a group to identify the client's trade cycle regarding their importing activities and to also identify the funding gap, approximate facility requirement and to consider some potentially suitable trade finance solutions. This session is then fully debriefed with all potential suggestions considered and assessed by the group.
  • A second scenario is then considered which combines both importing and exporting activities. Again the facilitator role plays the client and the delegates are required to map out the trade cycle, identify the funding gap/s and provide possible trade finance solutions. The second session is debriefed and the suggestions are again evaluated.

12.00 - 13.00 Lunch

Session 9: Incoterms � 2010 - A brief session which covers a key area for a financier.

  • Main objectives - to highlight the rules and how clients should interpret them in daily usage in their commercial contracts.
    • What are the Incoterm rules? - the importance of the rules to buyers, sellers and financiers.
    • Group led session using a simple technique to highlight the importance of the 11 terms, how many clients misuse these rules and the risks for the financier if this occurs.
    • Commonly misused terms and how to avoid the consequences.

Major Case Study 1

  • This will embed and build on the processes used in the trade cycle exercises. The facilitator will role play a typical internationally trading client with determinable funding requirements for import and export activities. The delegates will be required to meet the client and ask pertinent questions which will allow them to build up an understanding of what the client requires in terms of facilities, risk mitigation and other assorted needs.
  • Each group will need to be able to present accurate, considered opinions relating to their findings and potentially appropriate trade solutions will be required to have been identified during the meeting. This activity will require delegates to demonstrate knowledge gained from previous sessions, including fundamental risks, Incoterms� Rules, export documents and Procedures.

As a measure of knowledge gained, participants will prepare a basic outline proposal based on:

  • Trade Cycle
  • Risks
  • Mitigants
  • Trade Finance solutions recommendations

Session 10: Learning recap on Day 1 & 2.

Session 11: Increasing sales by understanding Risks & potential Mitigants in International Trade.

  • Main objectives - to provide a comprehensive insight into sellers and buyers key drivers, considerations and motivations for undertaking international trade transactions. Explore more widely the risks which the client has to address, with potential mitigants. In order to meet a client's needs and provide appropriate trade finance solutions it is essential that delegates have a wide appreciation of a client's motivations and considerations which drive their behaviour relating to their importing and exporting activities. This module helps to explore these key drivers, and helps the delegates develop their understanding and questioning techniques.
    • The facilitator will initially run a thought provoking session covering some potential considerations for buyers.
    • The second half of the module involves a group exercise where the delegates are provided with a client situation and in their groups they have to debate and then decide what are the buyer's key consideration s and drivers in participating in this particular sector, selling into a number of different territories. This will assist in helping the delegates being better equipped to ask pertinent and searching questions when they meet clients and target clients which is essential in the sales process.
    • Hand out will help the delegates take this understanding into their everyday encounters with clients.

Session 12: Buyers & Sellers Motivations/Considerations - includes a group exercise.

  • Main objectives - to provide a comprehensive insight into sellers and buyers key drivers, considerations and motivations for undertaking international trade transactions. Explore more widely the risks which the client has to address, with potential mitigants. In order to meet a client's needs and provide appropriate trade finance solutions it is essential that delegates have a wide appreciation of a client's motivations and considerations which drive their behaviour relating to their importing and exporting activities. This module helps to explore these key drivers, and helps the delegates develop their understanding and questioning techniques.
    • The facilitator will initially run a thought provoking session covering some potential considerations for buyers.
    • The second half of the module involves a group exercise where the delegates are provided with a client situation and in their groups they have to debate and then decide what are the buyer's key consideration s and drivers in participating in this particular sector, selling into a number of different territories. This will assist in helping the delegates being better equipped to ask pertinent and searching questions when they meet clients and target clients which is essential in the sales process.
    • Hand out will help the delegates take this understanding into their everyday encounters with clients.

12.00 - 13.00 Lunch

Session 13: Why Trade Finance? (why it is beneficial to banks/financiers & clients).

  • Main objectives - To discuss this main benefits of Trade Finance to clients and financiers, includes Basel regulations.
  • Syndicate exercises to debate the various benefits of structured trade finance for the client and the financier. Risks and mitigants will also be required for consideration.
  • The International Chamber of Commerce have recently published a report following the submission by 21 banks from 2008 -2011 of more than eight million trade transactions. The report suggests that the risk of default is very low if a trade solution is used by the client. This report will be discussed by the facilitator and shared with the group.

Major Case Study 2 - Creating a full Trade Report

  • Main objective - To culminate the training, the delegates will be required to meet a client (played again by the facilitator) and to discuss the client's importing and exporting business. The delegate's main objective will be to create a Trade Report which would highlight the risks and potential mitigants to the bank's credit function using information acquired in the meeting. This information would include;
    • Trade Cycles
    • Identification of Funding Gaps
    • SWOT analysis
    • Information on Suppliers & Buyers
    • Political, economic & sovereign risks
    • Suggested Trade Solutions
  • This is a more challenging example than previously encountered on the course, so it will test the delegates understanding and application of the knowledge gained over the three days.

Evaluation and Termination of the Course

Upcoming seminars in our training calendar
Training catalogue in PDF
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