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School of Trade Finance

Learn essential techniques on risk mitigation and financing of international trade
  • This 5-day Euromoney on-line virtual classroom 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 on-line training covers the importance of the commercial contract, Incoterms® 2020 rules, 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, whilst satisfying the bank’s requirement for controlled lending and credit support

     

    This on-line virtual classroom provides the engagement and participation of a physical class without leaving your home or office. Each day is structured into three separate 2 hour sessions. Case studies are discussed, and solutions formulated via delegate participation through virtual breakout syndicate rooms.

     

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

     

    The case studies and exercises described are provided for indicative purposes only. The trainer reserves the right of discretion to vary the selection of case studies covered in the on-line virtual classroom depending upon the background, experience and key learning objectives of the delegates in attendance and virtual classroom time availability

    How this on-line virtual classroom course will assist the delegates

    By attending this on-line virtual classroom training course, the delegates will:

    • Appreciate the importance of the commercial contract, Incoterms® and trade documentation
    • Identify trade risk and how this can be mitigated
    • Know the methods of payment, their use, risks and benefits to the buyer, seller and the financier
    • Understand the risks and benefits of each of the trade finance products and how and when they should be used
    • Appreciate the operation and risk considerations of demand guarantees and standby credits
    • Structure documentary credits, standby credits and letters of guarantee to mitigate risk
    • Construct a trade cycle timeline to evaluate type, amount and duration of trade finance
    • Appreciate why structured trade finance is an alternative to traditional lending assessment
    • Understand the key aspects and structuring techniques of receivables finance
    • Be aware of the key payables and supply chain finance solutions and when they should be used
    • Apply credit enhancement techniques, ECA support and evaluate credit insurance
    • Structure a self-liquidating trade finance facility
    • Appreciate the financing structures and risk management in structured commodity finance
    • Be aware of the market trends in trade finance

  • Each day will consist of 3 sessions

    Session 1  (approx 2 hours)
    Start time 9am BST (British Summer Time)
     
    Session 2  (approx 2 hours)
    Start time Midday BST (British Summer Time)

     

    Session 3 (approx 2 hours)
    Start time - 2pm BST (British Summer Time) 
     
     

    DAY ONE

     

    SESSION 1
    Conflicting needs, working capital & use of Incoterms® 2020

    Trade finance – its essential role in trade and revenue growth
     Conflicting requirements of seller and buyer
     The importance and implications of trade credit:
    • Credit risk exposure
    • Liquidity risk
     The trade cycle
     Working capital optimisation:
    • Cash conversion cycle
    • Identifying the funding gap
    • Importance and calculation of DSO and DPO ratios
     The essential role of trade finance:
    • Benefits to corporate and bank

    Exercise: calculation of DSO & DPO ratios and their assessment

    Incoterms® rules 2020
     Their relevance and importance to risk management
     Key differences to Incoterms® 2010
     Examination of the most commonly used Incoterms®
     Importance of Incoterms® from a trade financing perspective

    VIRTUAL BREAKOUT SYNDICATE
    Case study: evaluation of the needs of the seller, buyer and financier prioritising the Incoterms® rules in order of preference from a control and risk mitigation perspective

    SESSION 2
    Trade documentation; its importance in trade finance

    Commercial contracts
     Key aspects of the commercial contract:
    • Its importance to the financier

    VIRTUAL BREAKOUT SYNDICATE

    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
     Bill of lading:
    • Function and key features
    • Taking control of the goods
    • Other types of bill of lading
    • The use of the shipping guarantee; example
     Air waybill
    • Taking control of the goods:
    o Practical issues
    • Other transport documents and risk implications
    • Cargo insurance: key aspects and considerations
    • Inspection certification: its importance to risk mitigation

    SESSION 3
    Identifying & managing trade risk


    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, security over goods, debt recovery

    Methods of payment
     The payment “risk ladder”: key risk considerations for importer and exporter

    VIRTUAL BREAKOUT SYNDICATE

    Exercise: determining and negotiating the key commercial aspects of a trade transaction to mitigate risk

    DAY TWO


    SESSION 4
    Collections


    Documentary collections
     What a collection is and when it should be used
     Bank responsibility
     Parties
     Types:
    • Documents against payment (DP/CAD)
    • Documents against acceptance (DA)
     Operation
     Collection schedule of instruction (example)
     Risk and control features
     Protest
     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
     Financing opportunities

    VIRTUAL BREAKOUT SYNDICATE
    Case study: consideration of the risk and benefits to the financier of an advance against collections facility compared with a bank overdraft*
    *Depending on the background and composition of the delegates this may be replaced with an exercise on identification of missing information on a collection schedule

    SESSION 5
    Letters of credit (part 1 introduction & structure)


    Letters of credit
     What a letter of credit is and when it should be used
     Key aspects
     Parties
     Structure:
    • Availability
    • Expiry date and place
    • Document presentation period
    • Bank to bank reimbursement

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

     Confirmation:
    • Risk mitigation
    • Unconfirmed credits; risk implications to the beneficiary
    • Confirming bank liability:
    o Without recourse financing
    o Documentary risk
    • Silent confirmation:
    o Types
    o Operation and terms of a ‘commitment to negotiate’

    VIRTUAL BREAKOUT SYNDICATE
    Case study: examination of a completed import letter of credit application form and identification of technical issues and non-compliance with the terms of credit approval

    SESSION 6
    Letters of credit (part 2 process & documentation)


    Letters of credit (continued)
     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
     Importance of documentation: standard for examination
     Use of the letter of indemnity (LOI): example
     Complying presentation - obligation to honour/pay:
    • Exceptions to the payment principle
     Discrepant presentation; risk implications to the:
    • Beneficiary
    • Confirming bank
    • Negotiating bank
     Discrepant waiver:
    • Applicant waiver
    • Applicant rejection
    • Issuing bank waiver rejection

    VIRTUAL BREAKOUT SYNDICATE
    Case study: evaluation of an export letter of credit and identification of risk. Recommendations will be made for the restructuring of the LC terms to mitigate risk for the manufacturer (beneficiary)

    DAY THREE


    SESSION 7
    Letters of credit (part 3 financing & specialist types of letters of credit)


    Letters of credit (continued)
     Financing:
    • Pre-shipment finance
    • Discount/negotiation (example):
    o With and without recourse
    • Refinancing
    • Usance payable at sight
     ICC UCP 600, ISBP 745, URR 725 rules; appreciation
     Letters of credit: advantages and disadvantages

    Exercise: the calculation of the net amount payable to a letter of credit beneficiary following a request to negotiate complying documents

    Other forms of letters of credit
     Use, operation, risk and structuring of:
    • Transferable letters of credit
    • Back to back letters of credit
    • Revolving letters of credit

    SESSION 8
    Standby letters of credit

    Standby credits
     What a standby credit is and when it is used
     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 demand guarantee

    VIRTUAL BREAKOUT SYNDICATE
    Case study: assessment of the risk profile of a middle-party’s request for a standby letter of credit and an increase in their overdraft in respect of the purchase of pre-sold goods. Construction of the trade cycle timeline, calculation of the facility requirement and formulation of an import and export trade financing structure to mitigate risk for the bank and middle-party

    SESSION 9
    Letters of guarantee


    Demand guarantees
     What demand bank guarantees are and when they are used
     Key aspects
     Direct guarantees
     Indirect guarantees - operation and parties:
    • Nature, role and risk implications of the counter-guarantee (example)
     Types: bid, advance payment, performance and payment
     Text wordings: advance payment guarantee working example
     Key clauses: guarantee text construction
     Claim demand
     Risk appreciation:
    • Unjustified claim (unfair calling)
    • Fair calling (politically driven)
    • Extend or pay demand
    • Foreign laws and usages
    • Cancellation
     Risk management: structuring guarantees:
    • Reducing risk exposure for the applicant and bank
    • Tackling compliance risk exposure (money laundering & sanctions violation)
     URDG 758: appreciation and use

    VIRTUAL BREAKOUT SYNDICATE
    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

    DAY FOUR


    SESSION 10
    Forfaiting & credit insurance

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

    Exercise: consideration of a request to purchase an avalised bill of exchange, identification of the risk features and further information required to evaluate the proposition

    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

    VIRTUAL BREAKOUT SYNDICATE
    Case study: identification of risk from a seller’s and financier’s perspective in respect of a schedule of insurance

    SESSION 11
    Receivables finance


    Receivables finance
     What receivables finance is and when it is used
     Accelerating the receivable: improving the DSO ratio
     Nature of debt and implications for finance:
    • Invoice: assignment of debt
    • Bill of exchange and promissory note (examples)
     Proof of delivery (relevance of the Incoterms® rule)
     Disclosed and undisclosed facilities:
    • Risk implications
     Recourse and re-purchase events
     Seller - risk assessment:
    • Ability to perform
    • ‘Going concern’ status
     Debtor - risk assessment:
    • Ability to pay (and country transfer risk)
    • Willingness to pay
     Prepayment:
    • Determining the amount to finance (prepay): dilutions and retentions
     Types of receivables finance:
    • Specific debt purchase: insured and uninsured
    • Factoring
    o Difference between factoring and confidential invoice discounting

    VIRTUAL BREAKOUT SYNDICATE
    Case study: structuring an insured receivables finance solution for the sale of vehicles to a buyer in Africa on three years trade credit

    SESSION 12
    Structured trade finance


    Structured trade finance; exercising control
     The self-liquidating facility - primary source of repayment
     When and why deal structuring should be used
     Establishing an identifiable and reliable source of repayment:
    • Credit quality
    • Nature of the debt instrument
    • Dependencies: performance risk and allowable dilutions
     Understanding and evaluating the trade cycle:
    • Key stages - risk profile of each
    • Plotting the time flow of goods, documentation and money

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

     Exercising control: ‘follow the goods, documentation and the money’
     Facility structuring - key controls
     Structuring each stage of the trade cycle - controlling the nature of risk exposure:
    • Use of labelled/descriptive trade loans
    • Managing risk exposure aligned to facility sub-limits:
    o Drawdown documentation
    o Duration: repayment aligned to the trade cycle
     Taking security over the goods: pledge and trust receipt
     Reality of security - liquidation of goods

    VIRTUAL BREAKOUT SYNDICATE
    Case study: construction of a trade cycle and calculation of the facility requirement based upon the forecast business lines of a fabric importer, manufacturer and exporter

    DAY FIVE

    SESSION 13
    Payables finance & Export Credit Agencies


    Pre-shipment finance (supplier led)
     Description, use and operation
     Risk appreciation and structuring

    Approved trade payables finance/supply chain finance (buyer led)
     Description, use and operation
     Risk appreciation and evaluation

    Export Credit Agency (ECA) support
     Role of an ECA
     Financing and mitigating risk with ECA support
     Eligibility for ECA support: regulations and criteria
     Types of ECA support - description 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

    VIRTUAL BREAKOUT SYNDICATE
    Case study: identification of risk and construction of a trade financing solution for the importation of frozen chicken meat and its sale on extended trade credit terms

    SESSION 14
    Commodity finance (part 1 introduction & pre-export finance)

    Commodity trade finance
     What 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
     Financing the commodity trader
     Pre-export and prepayment:
    • Risk appreciation and mitigation

    VIRTUAL BREAKOUT SYNDICATE
    Case study: the structuring of a pre-export finance solution

    SESSION 15
    Commodity finance (part 2 warehouse finance & borrowing base)


     Warehouse financing:
    • Control of goods: warehouse receipt, warrant, deed of attornment
    o Warehouse receipt - negotiable?
    • Security over goods - legal implications of ‘lex situs’
    • Financing ratio
    • Risk appreciation and mitigation
    • Role of collateral managers
     Receivables:
    • Structural enhancement
     Borrowing base:
    • Operation
    • Risk appreciation

    VIRTUAL BREAKOUT SYNDICATE
    Case study: identification of the risks and construction of a financing solution across a commodity trade cycle

    Market trends

     

    Summary and close

     


    POST COURSE DELEGATE PACK
    Copies of the presentational slides will be sent to each delegate after completion of the course. The slides incorporate the following trade document examples:
     Debt instruments:
    • Bill of exchange
    • Promissory note
    • Bank aval
     Collections:
    • Collection instruction
     Letters of credit:
    • Letter of credit
    • Amendment
    • Allocation of proceeds
    • Discrepancy notice
     Standby credit
    • Standby letter of credit
     Demand guarantees:
    • Bid
    • Advance payment
    • Performance
    • Payment
    • Counter
     Letter of indemnity (LOI)
     Shipping guarantee
     Warehouse receipt


  • Our Tailored Learning Offering

    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 and dramatically increase your ROI.

    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.

  • 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 – 10/10 of the world’s largest banks have chosen us as there training provider and we have delivered training across the largest banks and have trained over 25,000 professionals.
    • Knowledge – our 100+ 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 25,000 events both in person and online, using simultaneous translation to delegates from over 99 countries.
    • Recognition – we are accredited by the British Accreditation Council and the CPD Certification Service. In an independent review by Feefo we scored 4.2/5 on service and 4.7/5 on Coursecheck
This course can be run virtually online or as an in-house, tailored learning solution

Instructor

  • Stephen Jones

    Biography

    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 exporterDuring 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 periodStephen 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.