Working Capital and Trade Finance - Intermediate

• Understand and articulate the importance of working capital management and trade finance solutions for both clients and financial institutions
• Understand why working capital is important, how it is defined and how it is commonly measured
• Be able to identify key client needs and the key building blocks of a solution to meet them
• Appreciate the critical elements of a supply chain and how it can be managed
• Be able to articulate the common solutions available to finance receivables and payables, how these work and the differences between them
• Understand what is happening in the global trade market right now and how clients and institutions are responding
• Be able to understand and identify both traditional and emerging risks to trade transactions and their financing
• Appreciate the ongoing financial crime, sanctions and AML risks that must be managed and mitigated
• Understand the fundamentals of trade and working capital solutions across a wide range of products and services including related benefits, considerations and pricing
• Demonstrate a working knowledge of different types of well-established trade instruments such as collections, letters of credit, and bonds and guarantees
• Be able to understand how and why different common trade products, services, and their variations are used in conjunction to structure tailored solutions for clients at a practical level
• Appreciate why open accounts and letters of credit dominate current market practices
• Understand why differing maturity profiles, limit structures, and collateral play an important part in structuring client solutions as well as the role of syndication
• Understand how risk, regulations, and innovation influence working capital management and trade financing both now and in the future
• Empower delegates to become or improve as practitioners

The current market and its clients

• The role of working capital management and trade finance for your clients and within your organisation
• Client needs and how these are evolving
• Key concepts and objectives of funded and unfunded solutions
• How banks traditionally segment clients
• Latest themes and challenges in the world of trade and working capital

Understanding the fundamentals of Working Capital and how it is measured

• The typical business operating cycle
• Working capital definitions
• The importance of working capital
• How positive and negative working capital differ
• Working capital ratios and the cash conversion cycle
• Exercise – measuring and interpreting the working capital cycles of different companies

Supply chains

• The importance of understanding movement of information, documents, goods, and cash
• The physical supply chain
• The financial supply chain
• Risks associated with supply chains
• Case study – Mapping out supply chains for a player in the global battery market

Working Capital Solutions - Overview

• The objectives of working capital solutions
• Core products and services
• The role of client relationships
• Importance of credit appetite and risk management
• The drivers and dynamics in pricing these solutions

Working Capital Solutions - Receivables Financing in focus

• Mechanics of how Factoring and Invoice Discounting work
• How Forfaiting differs
• Variations of receivables financing and what influences their availability
• Advantages and disadvantages to buyers and sellers of receivables financing
• The role of Credit Insurance in relation to receivables financing
• Securitisation options for receivables financing

Working Capital Solutions - Payables and Supply Chain Finance

• Mechanics of how Reverse Factoring/ Supply Chain Finance works
• Advantages and disadvantages to buyers and sellers of receivables financing
• Assessing benefits and feasibility of a payables solution
• Broader benefits and risk considerations of an SCF scheme

Case Studies:

• How receivables financing benefited a petrochemical company to improve their working capital and grow their business
• How supply chain management with an associated SCF scheme has been used for significant benefits in a global consumer brands company

Understanding Global Trade

• Traditional models and current trends in global trade
• Geographical and industry considerations
• The objective of classical trade solutions and how these fit clients who import/ export
• The Terms of Trade - Incoterms
• Key international trade documents and their requirements
• Why do banks like financing trade?

Traditional key risks associated with trade

• Identifying, understanding, and managing risk in international trade
• Sovereign, Political / Country risk
• Risks associated with Importers and Exporters
• Industry risk
• Credit risk, Market risk & Operational risk
• Financial crime, sanctions and AML considerations
• Operational efficiency and risk management through the client lens
• Exercise – comparing and contrasting the additional risks that buyers and sellers will be exposed to through trading internationally vs domestically

Key trade products overview

• How risk is balanced between buyer and seller - the ‘Risk Ladder ‘explained
• Open account and its fit with working capital financing solutions
• Collections – clean & documentary, sight vs deferred settlement
• Letters of Credit
• Guarantees
• Pricing drivers and differences

Collections

• Different variations of collections
• Mechanics of collections services
• Pricing dynamics
• Advantages and disadvantages of collections
• Associated risks to the importer and exporter

Letters of Credit

• Variations and considerations
• Mechanics of a letter of credit
• Confirmation
• Discounting
• Pricing dynamics
• Advantages and disadvantages of LCs
• Associated risks to importer and exporter

Standby Letters of Credit

• How SBLCs derisk trade
• Mechanics of a letter of credit
• Confirmation
• Pricing dynamics
• Advantages and disadvantages of SBLCs
• Associated risks to importer and exporter

Bonds and Guarantees

• Purpose
• Different types - Bid, Performance, Advance payment, Warranty and Retention bonds
• Re-issuing a guarantee
• Mechanics of a Guarantee
• Pricing dynamics
• Advantages and disadvantages of Bonds and Guarantees
• Associated risks to importer and exporter

Case Studies:

• Use of LCs to optimise working capital for a global energy company
• Use of SBLCs to improve working capital and optimise credit usage for clients in the sportswear industry
• Use of Bonds and Guarantees to de-risk the supply chain in the airline industry

Other key trade finance solutions

• Pre and post export/ shipment finance and its role
• Mechanics of Pre and post export/ shipment finance
• Commodity Finance as a specialist type of trade finance
• Organisation of the commodity finance market
• Key risks and specific considerations in commodity trade and financing

Structuring trade solutions

• Analysing trade flows
• Identifying and leveraging different maturity dates within a transaction or supply chain
• Facility structuring
• Use of collateral
• Role of correspondents and a banking network to support trade activity
• Syndication of trade exposures
• Case study – Structuring a solution for fashion goods supply chain utilising multiple trade instruments to optimise credit facilities and client operations

Focus on emerging trends and innovation

• Digital Trends
• Leveraging blockchain in transactions
• The emergence of smart contracts
• Exercise – Benchmarking key technologies and example providers against the traditional practices and traditional market players

Bringing it all together

• Offline case study review
• Course conclusion and review
• Recap of key learnings
• Feedback

The Working Capital and Trade Finance course trainer had a highly successful, long and varied “fast track” career in Lloyds Bank which 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 main board director level. He now has over 40 years’ trade finance experience.

The trainer has been a freelance trade finance training consultant since retiring and is currently an external Master Trainer at HSBC, where he has delivered major trade and structured trade finance-related courses. He has also taught similar programs at Bank of China.

He is a highly adaptive, hands-on and highly sought-after trade finance trainer who always receives excellent feedback from delegates. He is comfortable training at any level of seniority and experience, from “black belts” to novices. 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 & Retail Banking. He is also a highly experienced soft skills trainer and has completed numerous “train the trainer” assignments.

Delegates are invited to consider how the world of working capital management and trade finance operates for both clients and banks in a practical sense. This will help delegates to understand why trade and working capital solutions are critical to running and growing a business whilst managing and mitigating important risks. The Working Capital and Trade Finance course takes a holistic approach, exploring clients’ needs and operating practices, taking a comprehensive look at the products and services offered, and how these can be brought together to build and tailor a solution to meet these needs. It also covers related pricing and credit-related characteristics, as well as other broader and specialist aspects such as commodities. In addition to helping delegates understand the way the market works in practice, the Working Capital and Trade Finance course explores technology and innovation changes that are shaping the market and will continue to do so.

Whilst the Working Capital and Trade Finance course ensures key concepts and product mechanics are comprehensively covered it also heavily emphasises real-world examples and case studies to bring these to life and demonstrate how they are used in practice.