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The main objective of this Learning Unit is to understand how Factoring operates. Detailed Topic Listing as follows: LU FIT 007 Factoring Fundamentals 1. INTRODUCTION TO FACTORING 1.1 The Factoring Division 1.2 Factoring or Invoice Purchase Procedures 1.3 Initial Procedures 1.4 Mechanics of Processing a Client Order 2. THE FACTORING AGREEMENT 2.1 The Factor's Discretion 2.2 Fees 2.3 Termination 2.4 Personal Guarantee 3. The Contract 3.1 The Contract - Warranties 3.2 Purchase All Acceptable Accounts by Factor 3.3 Prior Approval of Sales 3.4 Notice of Assigned Invoices to appear on all Invoices 3.5 Purchase Price and Margin 3.6 Authorization to the Factor for Charges and Obligations 3.7 Procedures for approved account invoices 3.8 Reserve of Facial amounts of invoices over finance provided 3.9 Receipt of Goods without Dispute 3.10 Credit Terms 3.11 Solvency and law provisions Further Reading 1 - UNDROIT Convention on International Factoring 2 - Factoring - A Tool for Trade Financing 3 - Introduction to International Factoring and Project Finance 4 - Freight Factoring 5 - Factoring : A Better Alternative 6 - Factoring and the Firm Value Forum Assignment End of Unit
You will become familiar with the roll of the Export Credit Agency, ECA, Supplier Credits, Buyer Credits and gain an understanding of the concept of Warehouse Financing. Detailed Topic Listing as follows: LU FIT 008. ECA and Warehouse Finance 1. ECA BASED FINANCING 1.1 Medium to Long Term Financing 1.2 Market Characteristics 1.3 Long-Term Financing Needs 1.4 Participants in the Market 1.5 Export Credit Agencies 1.6 Export Credit Agencies - Protections 2. SUPPLIER CREDITS 2.1 Supplier Credits (continued) 2.2 Mechanics of the Supplier Credit 2.3 Advantages of Supplier Credit 2.4 Disadvantages of Supplier Credit 2.5 Players and Relationships in Supplier Credit 2.6 Commitment, Draw-down, and Payback in Supplier Credit 3. BUYER CREDITS 3.1 Mechanics of the Buyer Credit 3.2 Advantages and Disadvantages of Buyer Credit 3.3 Players and Relationships in the Buyer Credit 3.4 Commitment, Draw-down, and Payback in a Buyer Credit 3.5 Buyer Credit (Refinancing) 3.6 Comparison: Supplier and Buyer Credits 3.7 Bank Earnings and Fees 3.8 OECD Consensus or Arrangement 3.9 Benefits to Banks 3.10 Export Credit Insurance and the Berne Union 3.11 Benefits of Export Credit Insurance 3.12 Examples of Main ECA Providers and their Mission Statements 4. WAREHOUSE FINANCE Further Reading 1 - OECD Consensus - Arrangement on Officially Supported Export Credits 2 - Disciplining Trade Finance - the OECD Export Credit Arrangement 3 - Export Credit Guarantees, Moral Hazard and Exports Quality 4 - Testing the Trade Credit and Trade Link: Evidence from Data on Export Credit Insurance 5 - Public Export Guarantees and Foreign Trade Structure Forum Assignment End of Unit
The main objective of this Learning Unit is to understand the functioning of Letters of Indemnity (LOI) and fundamentals of Asset Based Lending. Detailed Topic Listing as follows: LU FIT 009 Commodity Trade Finance 1 STRUCTURED TRADE FINANCE 2 COMMODITY TRADE FINANCE 2.1 Commodities and Trade 2.2 What Commodities can be financed? 2.3 Commodity Trade Finance - The Players 2.4 Commodity Finance and Risk/Mitigation 3. LETTERS OF INDEMNITY 3.1 Letters of Indemnity 3.2 Letters of Indemnity - Other Purposes 3.3 Working with LOIs in favor of the Carrier 3.4 Things to consider when working with LOIs 4. COLLATERAL CONTROL FOR TRADE FINANCE 4.1 Collateral Control for Trade Financing Techniques 4.1.1 Repayment Seniority 4.1.2 Collateral Protection 4.2 Unsecured vs. Secured Lending 4.3 Establishing Collateral Values 4.3.1 Establishing Net Realizable Value ("NRV") 4.4 Accounts Receivable 4.5 A Correct Receivable 4.6 Inventory 4.7 Inventory Insurance 4.8 Advance Rates 4.8.1 Advance Rates for Inventory 4.9 Collateral Control 4.10 The Bill of Lading Further Reading 1 - The Economics of Commodity Trading Firms 2 - Commodity Finance Market Report 2014 3 - Trade Finance Developments and Issues 4 - Commodities as Collateral 5 - Structured Financing Techniques - Oil and Gas 6 - Commodity Finance Fraud 7 - Commodity Trade and International Risk Sharing Forum Assignment End of Unit
In this unit you will learn how to identify fraud schemes and how to prevent them from damaging your business. Detailed Topic Listing as follows: LU FIT 010 Trade Finance Fraud Identification and Prevention 1. Specifics of International Trade Finance Fraud 1.1 Definition of Trade Finance Fraud 2. Letters of Credit and UCP 600 2.1 Article 7 Issuing Bank Undertaking 2.2 Article 12 b. Nomination 2.3 Veracity of Documents 2.4 Acting in Good Faith 2.5 Entitlement to Reimbursement 2.6 Case History - Fake Inspection Certificate Presented 3. Bonds & Guarantees in International Trade 3.1 Definition of a Bond/Guarantee 3.2 Reasons for Requiring a Guarantee 3.3 Issuers of Guarantees 3.4 Direct / Indirect Guarantees 3.5 Categories of Bonds or Guarantees 3.5.1 Customer Implications re. Issued Bonds and Guarantees 3.6 Banks Consideration when Issuing a Demand Guarantee 3.7.1 Wording in Bonds/Guarantees Issued by a Bank 3.8 The Guarantee and the Contract 3.9 Standby Letter of Credit 3.10 Guarantees, Standby LCs & Fraud - Example Scenarios 4. The Bank and Customer Relationship 5. Trade Finance Fraud Prevention 5.1 The Occurrence of Letter of Credit Fraud 5.2 User of Trusted Third Parties 5.3 Highly Complex Transactions to Cause Confusion 5.4 Authentication of Documents 5.5 Money Laundering 5.6 Overcoming inadequate AML Legislation 5.7 The use of technology to avoid trade finance fraud 6. LC Independence Principle & Fraud Exception Further Reading 1 - A Comparative Analysis of the Standard of Fraud Required under the Fraud Rule in LC Law 2 - Preventing Letter of Credit Fraud 3 - The Fraud Exception in LCs : A Global Analysis 4 - Money Laundering and Financial Crimes Caribbean 5 - Documentary Credits in International Transactions with a special focus on the Fraud Rule 6 - International Trade Fraud Online Forum Access End of Unit