Advanced Trade Finance Masterclass

Considering the role of trade finance in the current marketplace at an advanced level

A variety of colorful glass sheets stacked together creating a rainbow effect

A two-day advanced trade finance course

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Download: Course Outline

Advanced Trade Finance Course - Day One Content

The Current Market Place

The impact of an unpredictable US trade policy
The impact of global conflicts
The current market
Global supply chains
The challenge of emerging markets
The dominance of the USA through the US dollar
China - is "diplomacy by loan" working
Geo-political challenges; especially protectionism in the USA
The traditional three bands of clients: Global and Large Corporate, MMEs, and the rest!
Understanding trade finance at a fundamental level
Typical users of Trade Finance products and services

Financial Crime Compliance & Sanctions – A Continuing High Priority For Regulators

Why does this matter? Why is trade finance considered high-risk?
Understanding the risk-based approach
TI CPI, FATF, Wolfsberg, ICC, OFAC and other influencers
Advanced trade finance courses at Redcliffe explore CDD and the need to obtain a clear line of sight across the value chain
Money laundering methodologies – how is it done?
Documentary fraud
PEPS
Sanctions overview
Case Study: Delegates will be asked to consider a real case to identify FCC risks and suggest how they may have been managed and mitigated

Traditional Risks – The Critical Issues For Experienced Practitioners

Understanding, identifying and managing the additional risks
Credit risk, market risk and operational risk
Sovereign, Political / Country risk
Institutional risk / Bank risk
Corporate and other critical risks
Importer and exporter’s risk
Other risks in the transaction and how to mitigate them (transport risk, warehousing, force majeure, etc.)
Risk mitigation, management and transfer
Case Study: An example using three different payment methods. Delegates will be asked to identify and explain what type of client would choose one in preference to the other two and why to illustrate risks in reality.

Review of Key Products – A High-Level Review

How does the customer analyse their risk?
Which products do they use and why?
Payment in advance
Open Account
Collections – Outward & Inward / Clean & Documentary
Letters of Credit (covered in more detail below)
Risks and opportunities
Control possibilities
Case Study: Shows how clients sometimes see the world of risk differently than bankers.

Supply Chain Management & Finance

The Origins of SCM and what does it mean in practice?
Understanding the issues in SCM – “the tug of war” between supplier and buyer
Bringing about a 'balance' between parties for effective processing
Understanding the movement of ‘information’, ’goods’ and ‘cash’
Supply Chain Finance Main SCF models: accounts payable - centric, accounts receivable, BPO
Reviewing the risk aspects of SCF
Case Study: Showing how Reverse Factoring works and how both buyer-centric and seller-centric models are being employed.

Advanced Letters of Credit (L/Cs)

Traditional L/C’s and the four contract concept
Confirmations
Red Clause
Green clause
Revolving L/Cs
Evergreen
Transferable L/Cs
Back to Back L/C structures
Case Study: Showing how different types of LCs are used, why this is the case and what difference it makes to the risk profile.

Standby Letters of Credit (Advanced)

History and origin
The dominant trade finance product
Uses
Risk management
Issue and assessment
Pricing
Understanding the applicability of ISP98 and UCP 600 for standbys
Fraud and unfair calling
Case Study: Using a standby in practice

Export Finance Issues

Looking at the big picture
Understanding the purpose of borrowing
Country risk issues
The reality of title and control
Negotiation under letters of credit
Discounting of deferred payment L/C, acceptance credits (with or without recourse)
Case Study: Delegates are asked to consider how to fund an export order using different contract arrangements.

Controlling Credit Exposure – Formulating a Limit

Redcliffe's advanced trade courses help you understand and explain the trade cycle
The use of timelines
Assessing and appreciating funding gaps
Case Study: Using timelines and facility plotting to spot double finance and identify the actual funding gaps and customer needs.

Advanced Trade Finance Course - Day Two Content

Innovations

Reverse Factoring
Seller Centric Solutions
UPAS
Repo's
Asset Based Lending
Case Study: An example of Reverse Factoring.

Structuring Finance for the Trader

Analysing the trade flows
Assessing facility size and structure
Specific lending with identifiable maturity dates
Appreciating and controlling sources of repayment
Case Study: An example of a medium-sized business using structured finance.

Effective Use of Collections for Short-Term Finance

Using collections as financing opportunities
Identifying and mitigating risks
Maintaining control

Supporting the Trader

Using the goods as collateral
Assessing the value of goods
The value of pledges and trust receipts
The need for structured lending
Case Study: How to use goods as security for a trade deal.

Warehousing of Goods

Warehouse location
Management assessment
Legal frameworks
Obtaining and retaining title and control
Risks and responsibilities of Collateral Managers
Cost versus control
Case Study: Warehousing in practice using a real example.

International Demand and Contract Guarantees / Bonds

Scope and Application – an introduction (suretyship v. demand guarantee)
Indemnities versus guarantees
Different types - Bid, Performance, Advance payment, Warranty and Retention bonds
The rules governing guarantees and bonds
Legal jurisdiction and expiry date issues
Value of using URDG 758 – ICC Rules for demand guarantees
Impact of non-bank competitors – COFACE, Euler Hermes
Case Study: Using these in practice.

Receivables Financing

Advanced trade finance courses also ensure that Mechanics of Factoring and Invoice Discounting are explored
Forfaiting – an important adjunct to the TF mechanism
The role of credit insurance
Mechanics of Securitisation
FCC risks
Case Study: A real example showing how this makes a huge difference to working capital.

The Commodity Sector and its Players

The history and origins of the commodity industry
Understanding the nature of ’commodities’
Analysing the players – growers/producers; traders and end-users
Financing of commodities
Looking beyond the balance sheet
Available documentation – taking and retaining the title
Commodity futures, options and derivatives
Hedging – a critical process in commodity finance
Role and function of the exchanges
The main risks in the commodity trade (market, fraudulent practices, legal issues, recent legal cases)
Case study: A large-scale commodity deal and how it can be funded at an acceptable level of risk

Countertrade

An overview – when to use
Pitfalls and complications
Possible structures and Time management

Syndications

When to syndicate
Lead or participant role
The completion from capital markets – high-yield bonds
Selling down exposure
Impact of quasi-governmental agencies
Risk/reward analysis
Case Study: A syndicated deal.

Advanced trade finance courses conclude with a review and feedback

This trainer had a highly successful, long and varied “fast track” career at Lloyds Bank. This opportunity led him to a very senior management position in the bank’s private banking and wealth management division at an early age. He was then “head hunted” to join a merchant bank at the main board director level, and has over 40 years of trade finance experience.

Redcliffe’s trainer has been a freelance trade finance training consultant since retiring and is currently an external Master Trainer at HSBC. He has delivered major trade and structured trade finance courses and has also taught similar programs at the Bank of China.

He is a highly adaptive, hands-on and highly sought-after trade finance trainer. Feedback from delegates is always excellent, and he is comfortable training at any level of seniority and experience, from novices to “black belts”. In addition to his trade finance specialism, his expertise includes but is not limited to; Risk Management, Trade Finance, Regulatory Compliance, FCC & AML and all aspects of Corporate, Private and retail Banking. He is also a highly experienced soft skills trainer and has completed numerous “train the trainer” assignments.

Understand what is happening in the current global trade finance market and how institutions are responding.
Learn how to become a better practitioner.
To demonstrate how trade finance works at an advanced level that goes beyond just a list of payment methods and their features.
How customers perceive risk and the paradoxes this can create.
Understand why open account trading dominates global trade despite the textbook definition of it being the most risky for the seller.
Appreciate why the letter of credit payment mechanism refuses to die, despite numerous predictions to the contrary.
Recognise that FCC & AML have placed significant burdens on trade finance as it is recognised – rightly – as being high risk for money laundering, especially layering.
Understand that when done well, trade finance is normally very low risk for credit losses and is usually very profitable.
The trade finance cycle; including break-even analysis.
Learn why sanctions are now mainstream considerations.
The risk-based approach and its impact on trade finance.
Advanced trade finance courses look at DDD, FATF, TI, CPI and their impact.
Understand and identify the traditional risks.
Review the key products and how the customer analyses his risk.
Master an understanding of supply chain management and finance.
Learn about the traditional letters of credit and the four contract concepts.
Explore standby letters of credit that dominate bank-supported trade.
Learn about exporting finance issues and controlling credit exposure.
The effective use of collections for short-term finance.
Get to grips with the international demand and contact guarantees/bonds.

Delegates are invited to consider how trade is financed from their client's perspective in the non-textbook real world. This will help you understand the way the market works in practice. This holistic approach (which doesn’t ignore or undervalue the key analytics) helps you to better understand the key trading client’s actual funding and other needs; enabling delegates to serve them more efficiently and hopefully profitably.

For example, 85% of global trade by volume is conducted on open account terms which the textbook indicates carries the highest risk for the seller. Most sellers are content to live with this risk – this advanced trade finance course explains why and how. Another example is confirmation of L/C’s. Many confirmations are now used to short-circuit the payment cycle rather than only for covering issuing bank risk. This course explains why.

The major challenge to trade finance in recent times has been the impact of Financial Crime Compliance and Sanctions. Whilst credit losses and credit risk are low, FCC risk is very high because of the increasing tendency for global trade to pass through more than one country, use different modes of transport and currencies, and transit through some regions where money laundering controls are not as strong as in others. This makes the audit trail very challenging. Unlike other courses that cover trade finance, this is not a course about FCC. But as trade finance is reckoned to be the main driver for money laundering, it needs to be understood.

Knowledgeable trainer. A clear method of communication & explanation.
A very practical course that went back to basics to explain all complex trade finance aspects.
Very clear presentation which was easily understood. The presentation on LCs was very interesting.
The course gave a very good and in-depth overview of the Trade Finance industry, applicable to SBM’s activities. I will apply the knowledge when structuring deals for clients and mitigating risks for the bank.
[The course] is very enriching and technical.
The course has enhanced my knowledge of Trade Finance. Being the legal person conducting the legal review of documents - I have gained a deeper understanding of the structure and concepts of Trade Finance. It was very interesting and I got a good insight into the subject and the trainer was exceptional in delivering the course.