Trade Finance Fundamentals: Letters of Credit, Letters of Guarantee and Bills for Collection

Understanding the basic principles of Trade Finance has become imperative for banking professionals as Financial Institutions increasingly place emphasis on this area due to the low interest margin environment and reducing income from other operations such as payments.

On the other end, trading professionals and other companies’ executives, procurement and purchasing departments officers and industry consultants must have a sound understanding of Trade Finance in order to negotiate with their suppliers, clients and bankers as to the best method of payment for each deal.

This introductory course will give the participants the opportunity to grasp and discuss the basics of Trade Finance products from a practical point of view with an industry specialist.

Training Objectives

Participants can expect to develop a good foundational understanding of the main Trade Finance products (namely Bills for Collection, Letters of Credit, Standby Letters of Credit and Letters of Guarantee), how they operate, what are the associated risks to each party and how to choose the most suitable method of payment. An overview of the International Commercial Rules (Incoterms 2010) will also be delivered.

Training Outline

• What is Trade Finance?
• Incoterms 2010 – an overview
• The 5 methods of payment; how to select the most suitable
• The basics of the main Trade Finance Products:
• Bills for Collection
  • Documentary Bills for Collection
  • Clean Bills for Collection
• Letters of Guarantee
  • Direct Guarantees
  • Indirect Guarantees (Counter Guarantees)
• Letters of Credit
  • Confirmed Letters of Credit
  • Transferable Letters of Credit
  • Back to back Letters of Credit
• Standby Letters of Credit

Training Style

The programme is designed to deliver knowledge and enhance participants’ skills via short lectures and practical examples.

Who should attend

The programme is ideal for bank employees that interact with the Trade Services department and need to understand how their products work in order to sell to the customers and to communicate internally. These bank employees would include primarily account managers, compliance, audit and risk department staff.

The programme is also suitable for employees of trading companies (those involved with import and or export of goods).

Lastly, it can also be beneficial to accountants and lawyers who would like to learn more about the practical side of this field.