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FINANCIAL MARKET COURSES

Trade Finance - An Introduction

Many of the products we buy and consume on a daily basis are traded internationally. In some cases, these items will have been transported half-way across the world before arriving in our shopping baskets. However, cross-border transactions present a number of potential difficulties for the parties – importers (buyers) and exporters (sellers) – involved. In addition to dealing with the practical problems arising from the movement of, and payment for, goods from one country to another, importers and exporters are simultaneously subject to numerous risks related to differing legislation, customs, and practices in these countries.

 

This course provides an overview of international trade finance, including the main risks associated with cross-border trade, the various payment methods used by importers/exporters, the key commercial documents, and the role of banks in international trade.

  • OBJECTIVES

    On completion of this course, you will be able to:

    Outline the main risks associated with international trade

    Describe the main methods of payment used to settle cross-border trades

    List and describe the main commercial documents used in international trade

    Explain the role of banks in both facilitating payments and providing funding for international trade

  • COURSE OUTLINE

    Topic 1: Risks of International Trade

    Difficulties of International Trade

    Key Risks

    o Foreign Exchange Risk

    • Transaction Exposure

    • Translation Exposure

    • Economic Exposure

    o Foreign Exchange Risk

    Topic 2: Methods of Payment

    Clean vs. Documentary Payments

    Draft/Bills of Exchange

    Methods of Payment

    o Most vs. Least Risky

    o Open Account Trading

    o Documentary Collections

    o Documentary Credits (Letters of Credit)

    o Payment in Advance

    o Countertrade

    Topic 3: Key Commercial Documents

    The Need for Documentation

    Key Documents

    o Commercial Invoice

    o Packing List

    o Certificate of Origin

    o Customs Invoice

    o Consular Invoice

    o Transport Documents

    • Bill of Lading

    • Air Waybill

    • Rail Waybill

    • Forwarding Agent’s Certificate of Receipts (FCR)

    o Insurance Documents

    Topic 4: Role of Banks in Trade Finance

    Foreign Branches & Correspondent Banking

    Payment Services

    o Open Account Trading/Trade Services Utility (TSU)

    o Documentary Credits and Collections

    o Check Payments

    o Bills of Exchange

    o Bank Drafts

    o Card Payments

    o Trade-Related Guarantees & Other Undertakings

    Funding Facilities

    o Pre-Shipping Finance

    o Buyer Credits

    o Supplier Credits

    o Factoring & Forfaiting

    o Post-Shipping Finance

    o Ancillary Services

  • PREREQUISITE KNOWLEDGE

  • ESTIMATED COMPLETED TIME

    75 Minutes

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