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 Mark et 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