Fitt Case Study Essay

869 Words May 20th, 2016 4 Pages
FITTskills: International
Trade Finance
Sixth Edition

Course Objectives


Define and discuss the “Four Pillars” of trade finance— payment facilitation, risk management, financing and the provision of information related to a transaction



Describe the impact of technology on trade finance



Describe the major products and services related to trade finance, including the role and requirement of each party to a transaction



Discuss the importance of export credit agencies and international financial institutions in international trade



Describe the importance of adequate planning relative to the financial aspects of international trade

10/20/2015
TF 1-2

An Introduction to
Trade Finance
The
…show more content…
Multinational

Risk Mitigation

TF Ch 1-7

Payment types

Importer
(Buyer/Applicant)
Open Account – Safest for Importer
Documentary Collection

Documentary Credit

Confirmed Documentary Credit
Payment in Advance – Safest for Exporter

TF Ch 1-8

Payment types
Payment

Roles and risk



Open Account



Exporter (Seller)



Documentary collections •

Bank(s)



Importer (Buyer)



Documentary letters of credit •

Confirmed documentary credit •

Payment in Advance



Sight or term payments

Terms


Factors affecting conditions of payment, including timing of payment

TF Ch 1-9

Documentary credit flow
Sales Contract and
Delivery of Goods

Importer
(Importer/Applica
nt)

Exporter
(Seller/Beneficiary)
Exporter
Documents,
Exchange for
Payment

Importer
Payment,
Exchange for
Documents

Verification & Transmission of
Documents, Remittance of Funds
Issuing Bank

Advising Bank
(Negotiating Bank)

Verification of documents by banks is a key characteristic TF Ch 1-10

Trade finance in a trade deal

TF Ch 1-11

Insurance and risk mitigation



Confirmed documentary letters of credit



Export credit and receivables insurance



Bonds, guarantees and standby credits

Insuring payment, protecting value

TF Ch 1-12

The global supply chain


Increasing use of Open Account terms



Changing sourcing patterns



Banks’ value

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