INTRODUCTION TO TRADE FINANCE

TRADE FINANCE –An IntroductionAgenda Course content International Trade and Inherent Risks Definition Need for Trade Finance Players and stake holders Elements of Trade Finance

Traditional Trending

Trade Financing Agencies Terminology Inco Terms Summary

TRADE FINANCE –Course ContentTable of contentsIntroduction to Trade Finance Documentary Credits Letters of Credit Exchange Rate Maintenance Forward Contracts Foreign Bills Remittances Pre and post shipment credit Bank Guarantees

TF – A Science or a set of activities??

TRADE FINANCE – An IntroductionTrade

DomesticInternational

The nature of relationship between the importer and exporter is critical to

understanding the methods of import-export financing utilized in industry.

INTERNATIONAL TRADERole of Trade Finance in International

TradeRisks in International Trade

PoliticalLegalCommercial

International trade is, in principle, not different from domestic trade as the motivation and the behavior of parties involved in a trade

do not change fundamentally regardless of whether trade is across a border or not.

TRADE FINANCE - DEFINITIONBasically related to 'Domestic as well as

International Trade Transaction'.It relates to the movement, purchase

and/or sale of goods or services and 'know-how‘.

Evolution of Trade FinanceHow Trade Finance works? 

TRADE FINANCE - NeedStrengthen supplier relationships secure supplies of key materials standardizing or extend payment termsAddress funding and risk mitigation needs

via tailored on and off balance sheet financing solutions in the open-account trade environment

Improve working capital efficiency through accelerated cash flows generated by receiving

early payments on a true-sale basisStrategically manage increasing sales volumes and

internal credit limits against key buyersGain visibility into transactions with real-time or

scheduled reporting utilizing our proprietary platform

TRADE FINANCE – Players & StakeholdersImporters & ExportersBankers & FinanciersInsurers & Export Credit AgenciesOther Service Providers

TRADE FINANCE - ElementsTRADITIONAL

Letters of CreditBank GuaranteesBillsBondsBank to Bank Reimbursements

TRADE FINANCE - ElementsTRENDING

Open Account TransactionsFactoring ForfaitingStructured Commodity Financing

TRADE FINANCE - AgenciesExport credit agenciesInsurance agenciesBilateral and Multi lateral agencies

TRADE FINANCE - TerminologySupplier financeReceivable financeReceivable purchasePost import financePre export finance

INCO TERMSDefinitionAccepted worldwideIntentionHistory of Inco TermsPresent position

INCO TERMS Inco Terms 2010General TransportSea and Inland WaterwayAllocation of costs to buyer/sellerElimination / Replacement of terms

First published in 1936, the Incoterms rules have been periodically updated, with the eighth version— Incoterms'—having been

published on January 1, 2011. "Incoterms" is a registered trademark of the ICC.

SUMMARYKey Business PrinciplesDefinition of Trade FinanceTrade Finance and International TradeTrade Finance and Financial sectorFinancial crisis and Trade Finance Inco Terms