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To understand how a documentary credit works and the obligations of the parties involved. Detailed Topic Listing as follows: LU FIT 003 Documentary Credits Fundamentals 1 - THE DOCUMENTARY CREDIT 1.1 Why Letters of Credit are Used 1.2 Guarantees for the Importer and the Exporter 1.3 Documentary Credit Rules 1.4 Example of SWIFT 1.5 The Parties to a Documentary Credit 1.6 Documentary Credit Cycle 1.7 Comment on Documentary Credits 1.8 Graphical Summary 1.9 Documentary Credit and the Importer 1.10 Documentary Credit and the Exporter 1.11 Suggestions for the Exporter 1.12 Opinion 2. OPENING A LETTER OF CREDIT 2.1 Opening a Letter of Credit 2.2 Letter of Credit and Contract of Sale 2.3 Banks and the Goods 2.4 Non-Compliance with the Terms of the Contract 2.5 Bank Charges 3. CONTENTS OF DOCUMENTARY CREDIT 3.1 Unconfirmed Irrevocable Letter of Credit 3.2 Tolerance 3.3 Partial Shipments 3.4 Transhipment 3.5 Type of Letter of Credit 3.6 Form of Advice of a Letter of Credit 3.7 Date and Place of Expiry 3.8 Date of Issue of the Credit 3.9 Description of the Goods 3.10 Advice and Confirmation of the Letter of Credit 3.11 Amendments 3.12 Details on Transport 4. IMPORT LETTERS OF CREDIT 4.1 Items to check with the importer 4.2 Completing Documentary Credit (DC) Application Form 4.3 Internal Records 5. TRANSMISSION OF DOCUMENTARY CREDIT 5.1 Charges for Documentary Credits Further Reading 1 - Sample LC Application form 2 - Dissertation on Using UCP600 3 - Sample SWIFT Template for LC 4 - Summary Guide to the UCP600 Rules 5 - The Power of Argument 6 - The Role of Documentary Credits in the International Sales Contract Forum Assignment End of Unit
The main objective of this Learning Unit is to learn about the managing the various documentary credit options available.Detailed Topic Listing as follows: LU FIT 004 Management of Documentary Credits 1. AVAILABILITY OF LETTER OF CREDIT 1.1 Letter of Credit available by Acceptance 1.2 Letter of Credit available by Negotiation 2. DOCUMENTS IN A LETTER OF CREDIT 2.1 Documents for Presentation 2.2 Comment on UCP 2.3 Which Documents to Request? 2.4 Copies or Originals? 2.5 Other Documents and their Contents 2.6 Discrepancies 2.7 Action if Documents have Discrepancies 2.7.1 Summary of Action if Documents are Discrepant 2.8 "Clean" Transport Document 2.9 On Board Bill of Lading 2.10 Sea Waybill 2.11 Insurance Documents 2.11.1 Date of Issue of Insurance Documents 2.12 CMR Convention 2.13 Air Waybill 2.14 Example 3. CHECKLISTS FOR DOCUMENTS IN AN L/C 4. TYPES OF LETTER OF CREDIT (I) 4.1 Revocable Letter of Credit 4.2 Transferable Letter of Credit 4.3 Back-to-Back Letter of Credit 4.4 Standby Letter of Credit 4.5 Revolving Letter of Credit 4.6 Red and Green Clause Letters of Credit 4.7 Latest Developments in Letters of Credit 5. TYPES OF LETTER OF CREDIT (II) 5.1 Irrevocable Letter of Credit 5.2 Confirmed Irrevocable Letter of Credit 5.3 Unconfirmed Irrevocable Letter of Credit 5.4 Summary - Types of Documentary Credit Further Reading 1 - Impact of the Doctrine of Strict Compliance on a Letter of Credit Transaction 2 - A Critical Commentary on the UCP 600 Rules 3 - Standby Letters of Credit and the Independence Principle 4 - Effective Notice of Refusal in Letter of Credit Transactions 5 - Negotiation in LC Practice and Law 6 - Standby Letter of Credit Rules and Practices Misunderstood or Little Understood by Applicants and Beneficiaries Forum Assignment End of Unit
The main objective of this Learning Unit is to learn about different types of bonds and guarantees and how they operate. Detailed Topic Listing as follows: LU_FIT_005 Bonds and Guarantees 1. INTRODUCTION 1.1 Issuers of Guarantees 1.2 Categories of Bonds or Guarantees 2. Tender Bond 2.1 Exporters and Tender Bonds 3. PERFORMANCE BOND 3.1 Purpose of Performance Bond or Guarantee 3.2 Exporters and Performance Guarantees 3.3 Performance Guarantees and Documentary Credits 3.4 Amount of the Performance Guarantee 4. ADVANCE/ PROGRESS PAYMENT BOND 4.1 Purpose of Advance/Progress Payment Bond or Guarantee 4.2 Advance Payment Guarantees and Documentary Credits 4.3 Amount of the Advance/Progress Payment Guarantee 5. RETENTION BOND 5.1 Other Types of Guarantees 6. ON DEMAND BOND 6.1 Rules Governing Demand Guarantees - Key Points 7. CONDITIONAL BOND 7.1 Advantages of Conditional Bonds or Guarantees 8. MANAGING BONDS AND GUARANTEES 8.1 Bank Obligations to the Beneficiary 8.2 Payment Guarantee 8.3 Importance of Correct Wording in Bonds or Guarantees 8.4 Bonds or Guarantees Customer Liability Records 8.5 Procedure for Obtaining Release from Liability 8.6 ICC Rules for the Issuance of Bonds and Guarantees 8.7 Bank Charges and Fees in Respect of Bonds and Guarantees 8.8 Standby Letter of Credit 8.9 Managing Bonds and Guarantees Further Reading 1 - UN Convention on Independent Guarantees and Stand-By Letters of Credit 2 - The Role and Importance of Bank Demand Guarantees in International Trade 3 - Fraud and the UN Convention on Independent Guarantees and Stand-By Letters of Credit 4 - Understanding the URDG 5 - Selective Legal Aspects of Bank Demand Guarantees 6 - No Guarantees No Trade: How Banks Affect Export Patterns Forum Assignment End of Unit
Understand the differences between the various short and medium term finance options used in international trade. Detailed Topic Listing as follows: LU FIT 006 Short and Medium Term Finance 1. INTRODUCTION 1.1 Overtrading and Liquidity 1.2 Short Term Finance 1.3 Working Capital Management 1.4 Cash Conversion Cycle (CCC) 2. MANAGEMENT OF RECEIVABLES 2.1 Trade Receivables Policy 3. INVOICE DISCOUNTING 3.1 Invoice Discounting - how it works 4. FACTORING 4.1 Benefits of Factoring 4.2 Obstacles to Growth of Factoring 4.3 Import and Export Factor 4.4 Comparison between Factoring and Invoice Discounting 4.5 Comparison between Factoring and Forfaiting 4.6 Comparison between Forfaiting and Factoring 5. BILL DISCOUNTING 5.1 Bill of Exchange Discounting - how it works 6. FORFAITING 6.1 Definition of Forfaiting 6.2 Endorsements 6.3 Aval as a Form of Guarantee 6.4 Application of Forfaiting 6.5 Primary and Secondary Forfaiting Markets 6.6 Forfaiting and Benefits for Exporter 6.7 Advantages of Forfaiting 6.8 Cost of Credit 6.9 The Rate of Discount 6.10 Forfaiting Example Further Reading 1 - Guide to Invoice Finance 2 - SME Exporters Guide to Forfaiting 3 - Invoice Discounting - Factoring in the Change 4 - Getting through the Cash Flow Pinch 5 - Financing SMEs with Forfaiting in the New Entrepreneurial Environment Forum Assignment End of Unit
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