Finance and Accounting Seminars

Advanced Trade Finance Masterclass



Objectives:

  • Understand what is happening in the global trade finance market right now and how institutions are responding
  • Empower delegates to become better practitioners
  • To demonstrate how trade finance works at an advanced level by going beyond just a list of payment methods and their features
  • To gain a better understanding of how customers perceive risk and the paradoxes this can create
  • Understand why open account trading dominates global trade despite the textbook definition of it being most risky for the seller
  • Appreciate why the letter of credit payment mechanism refuses to die, despite numerous predictions to the contrary
  • Recognise that FCC & AML have placed significant burdens on trade finance as it is recognised – rightly – as being high risk for money laundering, especially layering.
  • Understand that done well, trade finance is normally very low risk for credit losses and is usually very profitable
  • Appreciate the trade finance cycle including break-even analysis
  • Realise sanctions are now mainstream considerations
  • Understand the risk-based approach and the impact on trade finance
  • Get to grips with DDD, FATF, TI, CPI and their impact
  • Understand and identify the traditional risks
  • Review the key products and how the customer analyses his risk
  • Master an understanding of the supply chain management and finance
  • Learn about the traditional letters of credit and the four contract concept
  • Explore standby letters of credit which dominate bank supported trade
  • Learn about exporting finance issues and controlling credit exposure
  • Explore the effective use of collections for short-term finance
  • Get to grips with the international demand and contact guarantees/bonds

The Content:
The Current Market Place:

  • Recent evolution and current developments
  • The challenge of emerging markets
  • The dominance of China
  • Geo-political challenges especially protectionism
  • The traditional three bands of clients: Global and Large Corporate, MME’s, the rest!
  • Understanding trade finance at a fundamental level.
  • Typical users of Trade Finance products and services

Financial Crime Compliance & Sanctions:

  • Why does this matter? Why is trade finance considered a high risk?
  • Understanding the risk-based approach
  • TI CPI, FATF, Wolfsberg, ICC, OFAC and other influencers
  • CDD and the need to obtain a clear line of sight across the value chain
  • Money laundering methodologies – how is it done?
  • Documentary fraud
  • PEPS
  • Sanctions overview

Traditional Risks – The Critical Issues:

  • Understanding, identifying and managing risk
  • Credit risk, Market risk & Operational risk
  • Sovereign, Political / Country risk
  • Institutional risk / Bank risk
  • Corporate and other critical risks
  • Importer and Exporter’s risk
  • Other risks in the transaction and how to mitigate them (transport risk, warehousing, force majeure, etc.)
  • Risk mitigation, management and transfer

Supply Chain Management & Finance:

  • The origins of SCM and what does it mean in practice
  • Understanding the issues in SCM – “the tug of war” between supplier & buyer
  • Bringing about a “balance” between parties for effective processing
  • Understanding about movement of ‘information’, ’goods’ and ‘cash’
  • Supply Chain Finance Main SCF models: accounts payable - centric, accounts receivable, BPO
  • Review the risk aspects of SCF

Standby Letters of Credit:

  • History and origin
  • The dominant trade finance product
  • Uses
  • Risk management
  • Issue and assessment
  • Pricing
  • Understanding the applicability of ISP98 and UCP 600 for standbys
  • Fraud and unfair calling

Export Finance issues:

  • Looking at the big picture
  • Understanding the purpose of borrowing
  • Country risk issues
  • The reality of title and control
  • Negotiation under letters of credit
  • Discounting of deferred payment L/C, acceptance credits (with or without recourse)

Controlling Credit Exposure – Formulating a Limit:

  • Understanding and explaining the trade cycle
  • The use of timelines
  • Assessing and appreciating funding gaps.

Structuring Finance for the Trader:

  • Analysing the trade flows
  • Assessing facility size and structure
  • Specific lending with identifiable maturity dates
  • Appreciating and controlling sources of repayment.

Effective Use of Collections for Short-Term Finance:

  • Using collections as financing opportunities
  • Identifying and mitigating risks
  • Maintaining control.

Supporting the Trader:

  • Using the goods as collateral
  • Assessing the value of goods
  • The value of pledges and trust receipts
  • The need for structured lending
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