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Essentials of Trade Financing

Date: 9 & 10 March 2020 (Monday & Tuesday)

Time: 9.00am to 5.00pm
Venue: Dorsett Grand, Subang

INTRODUCTION

Trade can be very complex and the sole objective of receiving payment, or indeed the goods, by the parties involved are always in doubt, if the characters of the parties involved are questionable.

In order that both parties may be protected, Letters of Credit issued by Banks, are used.

The Letter of Credit (LC) or the Documentary Credit (DC) is a very ancient payment device. Its present form and the rules that govern it evolved from the international sale of goods.

The LC Issuing Bank’s responsibilities to Seller and Buyer are:

  • Undertake to pay the SELLER subject to presentation of fully compliant documents.
  • Undertake to examine the documents for full compliance, prior to payment by the BUYER.
  • In recent decades the scope of LCs have changed from one that guarantees payment for a performance to one that guarantees payment for non-performance.

    The functions of the LC have also been creatively modified to cater for advance payments, immediate payments, delayed payments, revolving payments and also guaranteeing non-payments.

    A good knowledge of their operations would be an obvious advantage to traders.

    However, just a sound knowledge of LC operations alone is insufficient to conduct profitable business. The trader should also be aware of all the Trade Financing products available from banks, and of significant importance is to obtain the correct type/s, quantum and tenor of the product/s that its business requires.

    This course provides all a normal business need to know about Letters of Credit and Trade Finance.

    COURSE OBJECTIVE

    To equip participants with a comprehensive knowledge of:

  • LC Operations
  • ICC Rules (UCP600, ISBP) relevant to LCs
  • Various trade financing products offered by commercial banks.
  • Skills to structure or compute the type/s, quantum and tenor of each trade financing product required by a particular business.
  • WHO SHOULD ATTEND?

    Entrepreneur, Managers and Executives to whom the knowledge of the operations of LCs and Trade Financing products are crucial.

    COURSE OUTLINE

    TITLE TOPIC
    General introduction to trade:
  • Parties involved.Different terminologies used for each of the trading parties,
  • Terms of Payment, namely:- Prepayment, ‘Sight’ and ‘Usance’ terms
  • Challenges in international trade
  • Terms of delivery – INCOTERMS
  • Common trade documents & relevant ICC Rules
  • How payments are made – the ‘collection’ bill cycles (non LC transactions – BCs), including:
  • Duties and responsibilities of each of the parties involved in a ‘collection’,
  • Advantages and disadvantages in trading under ‘collections’,
  • Main rules in the URC 522, governing ‘collection’ bills.
  • How payments are made under Documentary Credits (DCs) or Letters of Credit (LCs)
  • Various LCs and their ‘trade’ cycles.
  • The benefits and uses of Sight / Usance / Transferable / Back to Back / Red Clause / Revolving / Standby and Confirmed LCs.
  • SWIFT LCs.
  • Differences between ‘Mail’ and ‘SWIFT’ LCs and how to decipher SWIFT LCs.
  • How to apply for / amend an LC.
  • Exercise on the completion of an LC Application and the issuance of an LC, based on a sample of a ‘pro-forma’ invoice.
  • How an LC may be available eg: by sight payment; by acceptance or by negotiation.
  • Exercise on the issuance of an LC.
  • The main ICC Rules (UCP600 and the ISBP) relevant to LCs.
  • Procedures for the application, issuance, advice and amendment of LCs and the standard documents required.
  • Examination of standard instructions to:
    • o Exporter
      o Negotiating Bank
      o Reimbursing Bank.
    Import Services - Shipping Guarantees - SGs
  • Purpose and features of SGs.
  • How to apply for a SGs..
  • Endorsement of Air Waybills and 1/3 Bills of Lading
  • Procedures in handling lost Bill of Lading
  • Import services - Inward bills drawn under LCs
  • How banks check documents drawn under LCs
  • How banks handle discrepant documents and refuse payment
  • Danger/s of discrepant documents to buyers.
  • Import Financing Facilities - Bankers Acceptance (purchases – if applicable)
  • Features of Bankers Acceptance (BAs).
  • Financing ‘cycle’ of BAs.
  • How to apply for BA financing
  • Import Financing Facilities - Trust Receipts (TRs)
  • Purpose and features of TRs.
  • Financing ‘cycle’ of TRs.
  • How to apply for TR financing
  • Import Financing Facilities – Foreign Currency Trust Receipts (FCTR).
  • Features of FCTRs.
  • Financing ‘cycle’ of FCTRs.
  • How to apply for FCTR financing.
  • Import Financing Facilities - Invoice Financing Facilities - INF
  • Features of INF.
  • Financing ‘cycle’ of INF.
  • How to apply for INF financing.
  • Export services - Inward Letters of Credit.
  • Actions to be taken by sellers prior to receiving LCs from buyers.
  • Action by banks on Inward LCs received from other banks for sellers.
  • Actions to be taken by sellers upon receipt of LCs from buyers.
  • Why and when it is necessary to have inward LC confirmed.
  • Export Financing Facilities - Export Credit Refinancing (ECR – if applicable).
  • Features of ECR to finance purchases of raw materials and exports.
  • Financing ‘cycles’ of pre and post financing.
  • Export Financing Facilities
  • Features of Bankers Acceptance (sales – if applicable) / Bills for Collection / Bills Purchasing / Bills Discounting / Bills Negotiating / Bill Forfaiting.
  • Handling discrepant trade documents.
  • Common discrepancies in export documents
  • Measures to adopt in negotiating discrepant export documents.
  • Structuring or computing trade financing requirements. Case study in the calculation of the type / amount / tenor of facilities necessary to meet the trader’s needs, namely:
  • WHAT product/s is / are appropriate,
  • HOW MUCH of each product is required, and
  • For HOW LONG a particular product is required.
  • Also highlighted are the dangers in obtaining inappropriate amounts of facilities.
    Bank Guarantees (BGs). Features and uses of the following types of BGs:
  • Tender Bonds,
  • Performance Bonds,
  • Sub – contract Bonds
  • Advance Payment Bonds
  • Security Bonds,
  • Customs Bonds,
  • Immigration Guarantees,
  • Cash Cheque Guarantees, etc
  • Profit Guarantees.
  • Do’s and don’ts in Trade Financing.
    Questions and Answers.

    TRAINER’S PROFILE

    Noel Vong is our Senior Trainer and Senior Management Consultant. He has 40 years of banking experience with over 20 years in International Trade Finance. His experience in International Trade and Trade Finance includes the setting up of the Trade Bill Centers, customising Trade Finance manuals, developing Islamic Banking Trade Bill Products, centralizing trade processing activities, supervising marine and export-import operations, training staff and conducting Trade Seminars for public and bank customers.

    He is a retired Manager of a local & a foreign bank and has worked in all major towns in Malaysia. He has also worked in Banks in The Philippines, Cambodia, Hong Kong and Vietnam.

    Noel is an accomplished trainer cum consultant. Over the past 20 years, he has conducted many in-house and public Trade Finance courses in Malaysia and the Asean Region. For Islamic banking, he has rendered his expertise in developing and drafting Islamic Trade Finance products for commercial banks.

    COURSE FEES

    Early bird fee: RM1,590 per person - Register by 2 March 2020

    Normal price: RM 1,855 per person

    – SBL Claimable (includes Lunch, Tea-Breaks, Course Notes, Certificate of Attendance and SST 6%)

    *Group discount of 10% available (for 3 or more participants from the same company)

    ORGANISER

    Malaysian Export Academy
    No. 86, Jalan BP 7/8,
    Bandar Bukit Puchong,
    47120 Puchong, Selangor.

    Tel : 03 8066 3107
    Fax: 03 8066 6152

    MARKETED BY

    Asif International (M) Sdn Bhd
    19-2, Jalan Puteri 2/7
    Bandar Puteri
    47100 Puchong, Selangor

    Tel: 03 8066 3107
    Contact Person : Mohamed Ali Jinnah
    Email : mexportacademy2012@gmail.com

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