Fundamentals of International Trade Finance

This International Trade Finance training consists of lectures, case studies and discussions. Participants attending training should have a basic knowledge of international trade.

Introduction

• Trainer/Delegates

• Course Objectives

• Course Topics: Foundations of Trade and the Trade Industry

• Methods of International Trade

• Trade Documents

• Incoterms

• Key Trade Products/Methods

• Trade Documents Examination

• Trade-Based Financial Crimes

Foundations of Trade

• International Trade: Background of International Trade

• How International Trade Functions – Elements of a Typical Trade Cycle

Inherent Risks in International Trade:

• Importer’s Risks

• Exporter’s Risks

• Financial Crime Risk

• Country Risks

• Bank Risks

Attractions of Trade Finance to Banks:

• Revenue

• Cross-Selling Opportunities

• Low Risk

• Capital Efficient

• Easy to Monitor

Benefits of Trade Finance to Businesses:

• Securing Trade Transactions

• Negotiating Better Terms

• Transparency of Rights and Obligations

Trade Documents

• Importance of Trade Documents

• Principal Trade Documents Bill of Lading

• Airway Bill

• Bill of Exchange

• Pro-forma Invoice

• Commercial Invoice

• Insurance Policy

• Certificate of Origin

• Packing List

• Forwarding Agent’s Receipt

• Rail, Road Consignment Notes/Truck Receipt

• Multimodal Transport Document

Incoterms

• Definition and Purpose

• Structure of Incoterms Incoterms for all Modes of Transport

• Incoterms for Sea and Inland Waterway Transport Only

Key Trade Methods/Products

• Documentary Collections are considered in this section of our international trade finance fundamental course: Principal Parties in Collections

• Roles and Responsibilities of Banks in Collections

• Explanations of Salient Terms/Documents Bills of Exchange Parties to a Bill of Exchange

• Sight

• Usance

• Clean Bills of Exchange

• Acceptance of Bills of Exchange

Negotiability of Bills of Exchange

Discounting Bills of Exchange

Avalization

Protest of Bill of Exchange

Risks in Documentary Collections to Importers and Exporters

Case Studies:

• Based on the contractual terms between the buyer and seller, Gamma Bank advises the seller to consider using Documentary Collections as the payment method

• Roles and responsibilities of ABC Bank (Remitting Bank) and XYZ Bank (Collecting Bank) in an export transaction using Documentary Collections under URC 522

Documentary Credits/Letters of Credit

• Parties to a Letter of Credit and their Responsibilities

• Advantages and Disadvantages of Letters of Credit to Exporters and Importers

• Contracts in a Letter of Credit

• Workability of a Letter of Credit

• Cycle of Letters of Credit – Sight and Usance

• Explanation of Salient Terms/Documents Sight

• Usance

• DC Advised

• DC Confirmations

• DC Availability – by Negotiation, Payment and Acceptance is covered in this international trade and finance course

Types of Letters of Credit

• Revolving Letter of Credit

• Red Clause Letter of Credit

• Transferable Letter of Credit Mechanism of Transferable LC

Back-to-Back Letter of Credit

• Mechanism of Back-to-Back LC

Stand-by Letter of Credit

Third Port Letter of Credit

Local Letter of Credit

Case Study:

• Based on the contractual terms between the buyer and seller, PQR Bank advises the buyer to consider using a Letter of Credit as the payment method

• ABC Bank offers Stand-By LC as an alternative for a recurring sale of goods every month over a one-year period

Guarantees:

• Types Tender/Bid Bond

• Performance Bond

• Advance Payment Guarantee

• Retention Bond

• Counter Guarantees

• Warranties

Trade finance training covers the format and wording of Guarantees

• Demand for Payment – an essential feature

Renewal of Guarantee and/or Demand for Payment

Expiry and Return of Guarantees

Trade Documents Examination

• Buyer’s Responsibilities

• Seller’s Responsibilities

• Bank’s Responsibilities

• Adherence to UCP 600: Presentation of Documents Examination of Documents regarding Article 14

International Standard Banking Practices (ISBP) General Principles

Examination Processes/Rules for:

• Dates

• Drafts/Bills of Exchange

• Transport Documents – Bill of Lading/Airway Bill

• Invoices

• Insurance

• Certificate of Origin

• Packing List

Non-Compliant Documents:

• Letters of Credit

• Bills of Exchange

• Invoice

• Bill of Lading

International trade finance training examines three additional Case Studies:

• XYZ Bank as the issuing bank, considering the refusal of payment under a Letter of Credit where the goods have been lost at sea

• ABC Bank as the issuing bank, considering the refusal of payment under a Letter of Credit because the terms of the LC amendment were not complied with by the seller

• Use and interpretation of UCP 600 Article 14 in a situation where the Issuing Bank and Negotiating Bank contest the compliance of Article 14 terms

Trade-Based Financial Crimes

• Financial Crime Risk in Trade Finance

• Importance of Trade-Based Know Your Customer (KYC)

• Trade-Based Financial Crime: Money Laundering

• Terrorist Financing

• Sanctions

• Tax Evasion

Trade finance training considers other players in Trade-Based Financial Crime:

• Hawala Operators

• Money Exchange Service Providers

• Intermediaries/Professionals

Trade-Based ML/TF Red Flags

Commercial Fraud and Collusion

International Trade Finance Course Case Study

The case of Company Z undertaking over-invoicing as a means of money laundering and fraud provides an opportunity to identify typical red flags in an international trade transaction

Training Objectives

Upon completion of Redcliffe's international trade finance training, participants will be able to:

• Explain the situations where Trade Finance should be on the agenda of corporates and banks

• Identify opportunities to market Trade Finance solutions

• Identify potential risks to banks and businesses

• Explain the features, benefits, risks and consequences of using key Trade Finance products

• Understand the key financial crime risks emanating from international trade

Training Course Summary

From small to medium and larger businesses that import and export, Redcliffe’s International Trade Finance training is an important workshop for mastering the international trade environment.

Delivered over a single day, you will have the opportunity to investigate trade finance to determine where on the agenda this should appear. We will identify opportunities and solutions. Including any potential risks, whilst ensuring participants solidify their knowledge through interactive case studies.

Expect to gain practical insights covering a mixture of broad and nuanced topics.