Trade Finance, Letters of Credit and Bank Guarantees

Course Overview

This course helps participants secure company assets in both local and international transactions, negotiate commercial terms effectively, and utilise trade finance instruments such as letters of credit and bank guarantees.

Course Objectives

By the end of this course, participants will be able to:

• Understand trade finance fundamentals and best practices.
• Explore banking facilities related to trade finance.
• Negotiate commercial contract terms more effectively.
• Understand and utilise different types of letters of credit.
• Understand and utilise different types of bank guarantees.

Target Audience

This course is designed for:

• Financial Controllers
• Procurement Professionals
• Financial Analysts
• Business Development Managers
• Financial Managers
• Management Accountants
• Business Analysts
• Treasury Professionals

Course Outline

1. Trade Finance

• What is trade finance?
• Conflicting goals of exporters and importers
• Risks involved:
  • Product and manufacturing risks
  • Transport risks
  • Commercial risks
  • Adverse business risks
  • Political risks
  • Currency risks
  • Financial risks
• Participants in international trade transactions
• Terms of payment
• Critical questions in selecting terms of payment
• Shipping documents
• Shipping terms
• Documentary collection
• Documentary credit
• International trade issues

2. Banking Facilities and Services for Exporters and Importers

• Overdraft facilities
• Negotiation with banks
• Bills advance
• Documents presented
• Factoring
• Loans against imports
• Trust receipt facilities
• Export credit insurance

3. Contractual Relationships Between Contract Parties

• Buyer versus seller
• Applicant versus issuing bank
• Issuing bank versus beneficiary
• Issuing bank, advising bank, and beneficiary
• Issuing bank, confirming bank, and beneficiary
• Beneficiary versus negotiating bank

4. Letters of Credit

• Transferable credit
• Back-to-back credit
• Red clause credit
• Revolving credit
• Standby credit
• Accounting treatment
• Disadvantages of letters of credit
• Letter of credit discrepancies
• Terms of sale and delivery

5. Letters of Bank Guarantee

• Tender guarantee
• Advance payment guarantee
• Performance guarantee
• Warranty bond
• Retention guarantee
• Accounting treatment