Trade Finance School

5 days 5-9 Nov 2018, New York United States $5,595.00 Download brochure Add to basket

* Claim back your VAT
Find out more

Request a different date or location for this course (we regularly add courses following requests).

{{alternativeRequestSuccess}}
{{alternativeRequestError}}

* Claim back your VAT
Find out more

Overview

This Euromoney training course provides practical, in-depth coverage of international trade and commodity finance. The conflicting needs of buyer and seller are identified and how trade finance provides risk mitigation and working capital solutions for both exporter and importer

The training covers the importance of Incoterms® rules, commercial contract, the nature of trade documentation, how to maintain control over the goods, the risks faced by exporters, importers and banks, and detailed coverage of the key trade products to include the parties, mechanics, risk mitigating features, optimal structuring techniques and financing solutions

Emphasis is placed upon risk assessment, problem solving techniques and deal structuring, through a clear understanding of a corporate’s trade cycle. Great attention is paid to the effective and appropriate use of structured financing techniques in meeting the corporate’s needs for optimal working capital solutions, whilst satisfying the bank’s requirement for controlled lending and credit support

The course uses extensive case studies and exercises to develop the understanding of attendees in a practical and engaging way across a range of scenarios on the identification of risk, risk mitigation, structuring techniques and providing optimal working capital solutions for the bank and the corporate

How this course will assist you

By attending this interactive and highly practical five day training course you will:

  • Know when and how to use trade finance effectively
  • Appreciate the importance of the commercial contract, Incoterms® and trade documentation
  • Identify trade risk and how this can be mitigated
  • Construct a trade cycle time line to evaluate type, amount and duration of trade finance
  • List the methods of payment, their use, risks to the buyer, seller and the financier
  • Identify when and how trade finance products should be used
  • Describe the risks, benefits and legal aspects of each of the trade finance products
  • Understand the key aspects and structuring techniques of receivables finance
  • Describe the key supply chain finance solutions and when they should be used
  • Be able to apply credit enhancement techniques, ECA support and evaluate credit insurance
  • Appreciate the operation and risk considerations of on demand bonds and standby letters of credit
  • Identify client needs and to satisfy these through the use of trade finance
  • Appreciate and promote the benefits of trade finance
  • Gather information to thoroughly assess and evaluate a trade proposition
  • Structure a trade finance facility to mitigate risk, to follow the goods and the money and to get the deal approved
  • Explain why trade finance is an alternative to balance sheet lending assessment
  • Understanding the regulatory developments in trade finance
  • Describe the structures, products and risk management in commodity trade finance
  • Formulate a customer winning proposition
  • Apply AML, sanctions and fraud based risk assessment techniques

 

Instructors

We work with a series of expert instructors, please select the course location of interest to review the credentials of who will be delivering the programme.

New York
Stephen Jones

Stephen Jones is a highly experienced trade finance practitioner with over 40 years of trade finance expertise (35 of which was gained in the corporate banking environment). He has held senior trade positions in Lloyds Bank, NatWest and RBS.

Stephen was the first in NatWest Corporate to win, structure and execute a multi-million pound limited recourse receivables finance structure for a new to bank major client. The structure used a syndicate of private insurers to transfer buyer and political risk. This resulted in the successful provision of 3 years trade credit to a buyer in Africa and off balance sheet receivables finance to the exporter

During his time as Regional Head of International Trade, Stephen overviewed and structured his team’s trade finance submissions to the credit department achieving a 97% credit approval success rate over a 4 year period

Stephen continues to work as a trade finance practitioner and consultant advisor handling trade transactions and letters of credit thus enabling him to deliver training material relevant to today’s market

Venue

New York

New York Hotel

This program takes place on a non-residential basis at a New York hotel. Non-residential course fees include training facilities, documentation, lunches and refreshments for the duration of the programme. Delegates are responsible for arranging their own accommodation, however, a list of convenient hotels (many at specially negotiated rates) is available upon registration.

As with all programmes on-site administrators are with you throughout the programme to ensure smooth administration and group interaction.

Related Courses

Inhouse


 

Do you have five or more people interested in attending this course? Do you want to tailor it to meet your company's exact requirements? If you'd like to do either of these, we can bring this course to your company's office. You could even save up to 50% on the cost of sending delegates to a public course.

To find out more about running this course in-house:





Our Tailored Learning Offering

If you want to run this course at a location convenient to you or if you want a completely customised learning solution, we can help.

We produce learning solutions that are completely unique to your business. We'll guide you through the whole process, from the initial consultancy to evaluating the success of the full learning experience. Our learning specialists ensure you get the maximum return on your training investment.

inhouse-learn-more

We can offer any of our public courses delivered at your office or we can devise completely tailored solutions:


Read more about our offering or complete a call back request to speak to a learning specialist.

 

Agenda

Day 1


Trade finance – its essential role in trade and revenue growth

  • Conflicting requirements of seller and buyer 
  • The importance and implications of trade credit: 
    - Need for credit 
    - Credit risk exposure
    - Liquidity risk 
  • Working capital optimisation: 
    - Cash conversion cycle 
    - Identifying the funding gap 
    - Importance of DSO and DPO ratios
        - Calculation
  • The essential role of trade finance: 
    - Benefits to corporate and bank

Exercise; calculation of DSO & DPO ratios and assessment


Incoterms® rules 2010

  • Their relevance and importance to trade finance
  • Examination of the most commonly used Incoterms®
  • Importance of Incoterms® from a trade financing perspective

Exercise; evaluation of the needs of the seller, buyer and financier in a case study and listing the Incoterms® rules in order of preference from a control and risk mitigation perspective

Commercial contracts and trade documentation

  • Key aspects of the commercial contract:
    - Its importance to the financier

Case study; examination of a commercial contract and identification of areas of risk for the seller and financier and the required amendments to mitigate risk

Trade documentation; its importance to trade finance [examples provided in delegate pack]

Bill of lading;

  • Function and key features 
  • Taking control of the goods:
    - The requirement for original clean shipped on board bills of lading
    - Importance of consignee/negotiable status 
  •  Taking title to the goods:
    - Possessory documents: pledge and trust receipt 
  •  Other types of bill of lading
     Air waybill 
  •  Taking control of the goods:
    - Consignee
    - Practical issues 
  •  Other transport documents and risk implications 
  •  Cargo insurance; key aspects and considerations 
  •  Inspection certification; basis of inspection and its importance to risk mitigation

Trade and credit risk evaluation

Identifying and managing trade risk: 

  •  Financial; buyer credit risk, country and transfer risk 
  •  Political risk; contract and/or payment frustration 
  •  Commercial risk: debt instrument, method of payment, commercial terms, sales leverage 
  •  Performance; supply chain, nature of goods, delivery, dispute 
  •  Documentary; trade instrument performance, export and import clearance 
  •  Legal risk; impact on ICC rules, trade products, control of goods, debt recovery 
  •  Regulatory compliance risk; AML, CFT, sanctions and fraud

Methods of payment

  • The payment “risk ladder”; key risk considerations for importer and exporter

Exercise; the delegates will be asked to assume the roles of buyer and seller in order to determine and to negotiate key commercial aspects of a trade transaction in order to mitigate risk

Day 2


Documentary collections

  • What a collection is: 
  • Description 
  • Bank responsibility: 
  • Compliance with instructions 
  • No undertaking to honour or pay (unless bank aval) 
  • Document disclaimer; numerical count only 
  • Parties 
  • Types 
  • Documents against payment (DP/CAD) 
  • Documents against acceptance (DA) 
  • Operation 
  • Collection schedule of instruction (example) 
  • Risk and control features 
  • Protest 
  • When collections should be used 
  • Financing; advance against collections 
  • ICC URC 522 rules; appreciation 
  • Advantages and disadvantages


Bank Aval 

  • What avalisation is and when it should be used 
  • Risk and benefit features: 
  • Seller 
  • Buyer 
  • Avalising bank 
  • Financing bank 
  • Financing opportunities

Exercise; the delegates will be asked to identify missing information in a collection schedule of instructions

Documentary letters of credit 

  • What a letter of credit is: 
  • Description 
  • Key aspects: 
  • Bank liability 
  • Irrevocable 
  • Independence 
  • Conditional undertaking to pay 
  • Banks deal only in documents ‘on their face’: 
  • Document disclaimer 
  • Parties 
  • Structure: 
  • Sight and term 
  • Availability by: 
  • Sight payment 
  • Acceptance 
  • Deferred payment 
  • Negotiation 
  • Expiry date and place 
  • Documentary presentation period 
  • Bank to bank reimbursement


Exercise; calculation of the letter of credit facility requirement for an importer

Confirmation: 

  • Unconfirmed credits; risk implications to the beneficiary 
  • Confirming bank liability: 
  • Without recourse financing 
  • Documentary risk 
  • Silent confirmation 
  • Operation and terms of a ‘commitment to negotiate’ 
  • Letter of credit process 
  • Letter of credit example 
  • Amendments; 
  • Acceptance and rejection 
  • Risk appreciation: structuring the letter of credit to protect the: 
  • Applicant 
  • Issuing bank 
  • Beneficiary


Exercise; examination of an import letter of credit application form and identification of technical issues and whether the application complies with the terms of credit sanction

Day 3


Documentary letters of credit 

  • Importance of documentation: standard for examination 
  • Complying presentation: 
  • Obligation to honour/pay: 
  • Exceptions to the payment principle 
  • Discrepancy waiver: 
  • Applicant discrepancy waiver 
  • Applicant discrepancy rejection 
  • Issuing bank discrepancy waiver rejection 
  • Discrepant presentation; risk implications to the: 
  • Beneficiary 
  • Confirming bank 
  • Negotiating bank 
  • Financing: 
  • Pre-shipment finance 
  • Discount/negotiation (example) 
  • With and without recourse 
  • Refinancing 
  • Usance payable at sight: 
  • Maximising issuing bank revenue 
  • When letters of credit should be used 
  • ICC UCP 600, ISBP 745, URR 725 rules; appreciation 
  • Letters of credit; advantages and disadvantages


Case study; the delegates will be required to consider whether an export letter of credit is suitable for the beneficiary’s manufacture and shipment of a machine. The delegates will be required to identify technical issues and beneficiary risk exposure and provide advice to a letter of credit beneficiary on its suitability and make proposals for amendments to mitigate risk exposure and to facilitate financing

Other forms of letters of credit 

  • Operation, risk appreciation and use of: 
  • Transferable letters of credit

Case study; examination of a request to transfer a letter of credit and identification of changes which are allowed under UCP 600 

  • Back to back letters of credit 
  • Revolving letters of credit


Standby credits 

  • What a standby credit is 
  • The operation of standby credits 
  • Commercial standby letter of credit (working example) 
  • Structuring standby credits; risk appreciation and mitigation 
  • The use of UCP 600 and ISP 98 
  • How a standby credit differs from a documentary credit and letter of guarantee


Case study; assessment of the risk profile of a client request for a standby letter of credit in respect of the purchase of pre-sold goods. Construction of the trade cycle timelines, and formulation of an import and export trade financing structure to mitigate risk for the bank and distributor and calculation of the facility requirement

Bonds & guarantees 

  • What on demand bank guarantees are 
  • Key aspects: 
  • Irrevocable 
  • Independent 
  • Unconditional undertaking to pay 
  • Exceptions to the payment principle 
  • Banks deal in documents only 
  • Ease of claim (beneficiary claim documentation) 
  • Direct guarantees; operation and parties 
  • Indirect guarantees; operation and parties: 
  • Nature, role and risk implications of the counter-guarantee (example) 
  • Types; Bid, performance, advance payment, payment, letter of indemnity 
  • Text wordings (examples) 
  • Bank’s own standard wording 
  • Private text (and requirement for approval) 
  • Key clauses; guarantee text construction 
  • Claim demand: 
  • Demand requirements: 
  • Claim demand statement 
  • Separateness of each demand 
  • Period for examination 
  • Risk appreciation: 
  • Unjustified claim (unfair calling) 
  • Fair calling (political) 
  • Extend or pay notice 
  • Foreign laws and usage 
  • Cancellation 
  • Risk management; structuring guarantees: 
  • Operative clauses 
  • Variation in amount 
  • URDG 758; appreciation and use

 


Day 4


Case study; consideration of a request to issue an advance payment guarantee, identification of the risks and formulation of a proposal to mitigate risk exposure

Forfaiting 

  • What forfaiting is and when it is used 
  • Description, parties and operation 
  • Without recourse finance: 
  • Events of recourse 
  • Primary and secondary purchase 
  • Risk appreciation and due diligence 
  • ICC URF 800; appreciation


Case study; consideration of a request to purchase an avalised bill of exchange and identification of the risk features and further information required to assess the proposition

Structured trade finance; exercising control 

  • The self-liquidating facility; primary source of repayment 
  • When and why deal structuring should be used: 
  • Requirement to transfer the primary source of repayment away from the borrower 
  • Exercising control; ‘follow the goods, documentation and the money’ 
  • Facility structuring; key controls: 
  • Linkage of payment and/or finance to trade documentation 
  • Use and application of finance 
  • Establishing an identifiable and reliable source of repayment:
    - Credit quality
    - Nature of the debt instrument
    - Dependencies; performance risk and allowable dilutions
    - Controlling the source of repayment; ring fencing, ownership and capture 
  • Structuring each stage of the trade cycle: controlling the nature of risk exposure 
  • Funding alignment; trade loans linked to the trade cycle: 
  • Use of labelled/descriptive trade loans 
  • Managing risk exposure aligned to facility sub-limits; 
  • Drawn down documentation 
  • Duration; identifiable date set for repayment aligned to the trade cycle 
  • Reality of title and control; liquidation of goods


Proposition assessment; gathering key information 

  • Key questions to identify and evaluate transactional risk: 
  • Trade proposition evaluation checklist (delegate pack) 
  • Understanding and evaluating the trade cycle: 
  • Key stages; risk profile of each 
  • Plotting the time flow of goods, documentation and money 
  • Identification of the funding gap 
  • Determining the right form of finance 
  • Calculating the facility quantum and period

Exercise; identification of the funding gap and calculation of the facility requirement

Short term credit insurance 

  • What credit insurance is and when it should be used 
  • Working with and evaluating a credit insurance policy: 
  • Assessing the extent of cover 
  • Financier endorsement; joint insured Vs loss payee 
  • Risk appreciation; adherence to policy terms and conditions

Receivables finance 

  • Financing open account transactions: 
  • What receivables finance is and when it is used 
  • Accelerating the receivable; improving the DSO ratio 
  • Nature of debt and implications for finance: 
  • Invoice (example): 
    - Assignment of debt 
  • Bill of exchange and promissory note (examples)
    - Negotiability 
  • Proof of delivery (relevance of Incoterms® rule) 
  • Disclosed and undisclosed facilities: 
  • Risk implications 
  • Recourse and re-purchase events 
  • Risk assessment: 
  • Seller: 
    - Ability to perform
    - ‘Going concern status’ 
  • Debtor:
    - Ability to pay and transfer risk
    - Willingness to pay 
  • Nature of goods; specification and quality 
  • Timeliness of delivery 
  • Post-delivery performance obligations 
  • Trade credit term 
  • Collectability of debt; legal right to recovery 
  • Prepayment; debt purchase at a discount to face value: 
  • Determining the amount to finance (prepay); dilutions and retentions 
  • Types of receivables finance: 
  • Specific debt purchase: 
    - Insured
    - Uninsured 
  • Factoring 
    - Difference between factoring and confidential invoice discounting 
  • The use of invoice finance and factoring in trade finance


Case study; assessment of the risk profile and structuring of an insured receivables finance solution for the sale of vehicles to a buyer in Africa on three years trade credit

Day 5


Pre-shipment finance (supplier led) 

  • Description and operation 
  • Risk appreciation and structuring: 
  • Identifiable and reliable transactional source of repayment 
  • Importance of performance risk 
  • Trade loans; aligned to the trade cycle

 

Approved trade payables finance (buyer led) 

  • Description and operation 
  • Risk appreciation

Export Credit Agency support (ECA) 

  • The role of an ECA 
  • Financing and mitigating risk with ECA support: 
  • Credit insurance; commercial and political risk 
  • Loan guarantee to lenders 
  • Direct support/lending (in qualifying buyer credit transactions) 
  • Parties 
  • Eligibility for ECA support; regulations and criteria 
  • Types of ECA support; description, parties and operation: 
  • Supplier credit 
  • Buyer credit 
  • Lines of credit; general purpose and project specific 
  • Partial guarantees to lenders 
  • Bond support 
  • Letter of credit confirmation support 
  • Credit insurance cover

Commodities trade financing 

  • What structured commodity finance is and when it should be used 
  • Using structured commodity finance to look beyond the balance sheet 
  • Typical commodities 
  • An appreciation of the key risk characteristics of commodity financing: 
  • Inherent risk characteristics of the commodity to be financed 
  • Market risk 
  • Transactional risk 
  • Control of the goods and receivable throughout the commodity trade cycle 
    - Source of repayment; identifiable and reliable? 
  • Financing the commodity trader:
  • Risk appreciation, evaluation and mitigation 
  • Key methods of commodity financing: 
  • Pre-export/pre-payment:
    - Risk appreciation and mitigation


Case study; assessment of the risks of the pre-export finance of coffee crop and the structuring of a solution to mitigate risk

  • Warehouse financing:
    - Control of goods; warehouse receipt, warrant, letter of attornment: 
  • Negotiable status? 
  • Legal implications “lex situs” to ownership and sale
    - Financing ratio
    - Risk appreciation and mitigation 
  • Role of collateral managers 
  • Receivables
    - Structural enhancement: 
  • Use of off shore collection accounts 
  • Debt reserve and service accounts 
  • Top up and acceleration provision 
  • Borrowing base
    - Operation
    - Risk appreciation


Case study; identification of the risks and construction of a trade financing solution across the commodity cycle for a copper transaction

The abuse of trade finance 

  • Key types of abuse 
  • Why trade finance carries high compliance risk 
  • An introduction to trade based money laundering: 
  • Common methods


Case study; consideration of a request to issue a letter of credit which is not in the ordinary course of business of the applicant and identification of the nature of the underlying transaction

Recent developments and trends 

  • Latest market trends: 
  • Increasing role of open account trade in import and export financing 
  • Results of the latest ICC market survey; trade finance default risk 
  • Bank Payment Obligation; operation and market constraints 
  • Blockchain finance; potential application in the trade finance market


 

Why us


We have a combined experience of over 60 years providing learning solutions to the world’s major organisations and are privileged to have contributed to their success. We view our clients as partners and focus on understanding the needs of each organisation we work with to tailor learning solutions to specific requirements.

We are proud of our record of customer satisfaction. Here is why you should choose us to help you achieve your goals and accelerate your career:

  • Quality – our clients consistently rate our performance ‘excellent’ or ‘outstanding’. Our average overall score awarded to us by our clients is nine out of ten.
  • Track record – we have delivered training solutions for 95% of worlds’ top 100 banks and have trained over 250,000 professionals.
  • Knowledge – our 150 strong team of industry specialist trainers are world leading financial leaders and commentators, ensuring our knowledge base is second to none.
  • Reliability – if we promise it, we deliver it. We have delivered over 20,000 events both in person and online, using simultaneous translation to delegates from over 180 countries.
  • Recognition – we are accredited by the British Accreditation Council and the CPD Certification Service. In an independent review by Feefo we scored 96% on service and 95% on product