Advanced Trade Finance Masterclass

Introduction:

Securing the company’s assets while transacting with local and international customers is critical for the success and sustainability of a business. In this course, you will learn how to properly transact with foreign companies to support your topline without sacrificing your assets and financial stability. You will also learn how to negotiate with trade counter-parties to secure favorable commercial terms.

Targeted Groups:

• Financial Controllers
• Procurement Professionals
• Financial Analysts
• Business Development Managers
• Financial Managers
• Management Accountants
• Business Analysts
• Treasury Professionals
• Persons who want to gain great experience to improve their career

Course Objectives:

At the end of this course the participants will be able to:

• Understand what is happening in the global trade finance market right now and how institutions are responding
• Empower delegates to become better practitioners
• Demonstrate how trade finance works at an advanced level by going beyond just a list of payment methods and their features
• 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
• Recognize that FCC & AML have placed significant burdens on trade finance as it is recognized – 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
• Realize 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

Targeted Competencies:

• Understanding trade finance
• Negotiating commercial terms
• Securing assets and profitability
• Utilizing trade finance tools to support revenues
• Mitigating trade finance risks

 Course Content: 

 Unit 1: 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

Unit 2: 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

Unit 3: 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

Unit 4: 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

Unit 5: 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

Unit 6: 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)

Unit 7: Controlling Credit Exposure – Formulating a Limit:

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

Unit 8: Structuring Finance for the Trader:

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

Unit 9: Effective Use of Collections for Short-Term Finance:

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

Unit 10: 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