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2019 | Buch | 2. Auflage

International Trade Finance

A Pragmatic Approach

verfasst von: Tarsem Bhogal, Arun Trivedi

Verlag: Springer International Publishing

Buchreihe : Finance and Capital Markets

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The 21st century has witnessed swift change in every sphere of the human endeavour. Regulatory re-alignment, digitalisation and economic and political developments have contributed to paradigm shift in banking, trade, finance and the shipping industry virtually transforming the landscape. International Trade Finance is an essential tool for bankers, exporters/importers, shippers, consultants, teachers and students navigating the procedures of international trade finance. The book addresses basic topics relating to international trade including letters of credit mechanism, collections of bills, trade customs and practice. New to this revised edition, it covers SWIFT updates, supply chain system, UKEF, Blockchain technologies, the implications of BREXIT, NAFTA, Mexico, Canada and other bilateral agreements and their implications, the US sanctions, terrorist financing and anti-money laundering provisions, and a check list to control financial crime risks in trade finance. The extended metaphor of the book is that of an arm chair tour covering fundamentals to the nuances of the hard core of the subject matter and enabling the readers to deal with complicated implementation issues in a forthright and comprehensive fashion.

Inhaltsverzeichnis

Frontmatter
1. International Trade and Inherent Risks
Abstract
Ever since World War II there has been a considerable increase in world trade between independent sovereign states. In international trade, importers and exporters are quite often confronted with problems arising from the movements of goods from one country to another and are simultaneously subject to the different legislation, customs and practices of these countries. Importers and exporters have certain concerns such as:
Tarsem Bhogal, Arun Trivedi
2. Services Offered by Commercial Banks
Abstract
The finance of international trade forms an important part of any major bank’s services package. Many banks have specialised departments to handle the various aspects involved, comprising experienced staff able to cope with the demands of customers with overseas business to transact.
Tarsem Bhogal, Arun Trivedi
3. Methods of Trade
Abstract
In international markets the situation is often more complex than in local markets. In local markets it is possible that the parties may have known each other for some time and have built a certain level of trust. Trading risk in local markets is much less than in international markets. There are a number of methods of trade and settlement of trade accounts. Details of various methods of trade that are available to buyers and sellers for trading indicating the risks involved and the benefits are discussed in the following pages. Before importers and exporters decide to do business with each other they need to understand and adopt a method suitable to meet their specific needs.
Tarsem Bhogal, Arun Trivedi
4. Foreign Exchange Rates
Abstract
Both the importer and the exporter need to know what means are available to make payments overseas and to receive payments from foreign buyers. They may have the option to decide whether to trade in GB pound or a foreign currency. Before they look at these important points, it would be better to consider the international financial system as this will help in the selection of the appropriate method of payment and/or settlement of funds due.
Tarsem Bhogal, Arun Trivedi
5. Bills of Exchange, Collections, Purchasing and Discounting
Abstract
Bill of exchange: Bills of exchange are widely used in international trade, partly since they are convenient methods of debt collection from traders abroad. Finance may be arranged in a number of ways against bills of exchange, both for the buyer (drawee) and for the seller (drawers). If a bill of exchange has been dishonoured the holder may sue the other parties to the bill.
Tarsem Bhogal, Arun Trivedi
6. Documentary Letters of Credit
Abstract
There is always an underlying agreement between the principal parties to a trade transaction, often a buyer and a seller. The agreement may be verbal or written in a formal or informal language. Its terms may be simple or complex, as the parties may feel necessary. Such an underlying agreement is referred to as a “sale contract”.
Tarsem Bhogal, Arun Trivedi
7. Letters of Credit: Types
Abstract
Let us understand letter of credit and its various types with the help of a grid as in Fig. 7.1.
Tarsem Bhogal, Arun Trivedi
8. Methods of Payment Settlement
Abstract
There are different methods of payment settlement. The following statement is made by the issuing bank: “We hereby engage that payment will be duly made against documents presented in conformity with the terms of this credit”.
Tarsem Bhogal, Arun Trivedi
9. Financial Load Variations: Eight Types of Letters of Credit
Abstract
Financial load is for transit time only and borne by the beneficiary
Tarsem Bhogal, Arun Trivedi
10. INCOTERMS 2010
Abstract
INCOTERMS stands for International Commercial Terms for the use of buyers and sellers of goods. When a contract is made between buyer and seller or importer and exporter the terms of sale and purchase for delivery of goods must be clarified to avoid any dispute at a later stage. Very often this is not done in the initial stage and oversight or lack of knowledge of the INCOTERMS on the part of the parties involved can cause difficulty to them and also their bankers.
Tarsem Bhogal, Arun Trivedi
11. Documents in Foreign Trade
Abstract
A letter of credit is an undertaking between the issuing bank and the beneficiary to pay, accept bill(s) of exchange and make payment on maturity provided the beneficiary fulfils the requirement under a credit. The applicant requests the bank to issue a letter of credit to ensure that he receives the right quality and quantity of goods from the supplier. Banks do not deal in goods but only with documents. The issuing bank requires the beneficiary to present the documents evidencing the quality and quantity of the goods dispatched by him to meet the requirement of a letter of credit. Therefore, both the applicant and the issuing bank should be clear about the type of documents required and the significance of each document.
Tarsem Bhogal, Arun Trivedi
12. Negotiation of Documents
Abstract
The seller may sometimes present documents that do not meet the letter of credit requirements. In such a case, the bank may act in one of the following ways:
Tarsem Bhogal, Arun Trivedi
13. Factoring and Forfaiting
Abstract
Factoring represents the sale of outstanding receivables related to export of goods by the exporter to overseas buyers. The seller of the receivables thus transfers the risk of default on contractual obligations arising from non-payment by the buyer to a third party. The seller of the receivables is paid discounted value of the receivables, arising either from a letter of credit, guarantee or bill. Factoring is possible with recourse or without recourse. The advantages enjoyed by an exporter due to such financing are immediate payment after export. The exporter can enjoy financial benefit, in the case of without recourse, at no risks arising from the deal after factoring.
Tarsem Bhogal, Arun Trivedi
14. Electronic Documents (eUCPeUCP)
Abstract
Background to eUCP (Uniform Custom and Practice) 600: The emergence of electronic commerce in the international trade system has completely transformed the way the business community does business with its overseas counterparts. This has created the need for a new set of rules and procedures governing global trade operations including entering into sale contracts, trade payment and handling of goods and documents. This has given rise to a new agency being introduced into the international trade mechanism, that of a reliable and trusted third party to do the important work of authentication and safe keeping of messages and their integrity, storage and retrieval; give instructions to various service providers; and trigger release of goods and payment.
Tarsem Bhogal, Arun Trivedi
15. Scrutiny of Documents: Procedures
Abstract
Documentary Credits: Documentary credits are classic instruments for financing purchasing of foreign goods and foreign equipment. They may provide assistance to the issuing bank to grant financial facility to the importer. They may also provide assistance to the advising/confirming bank to grant financial facility to the exporter.
Tarsem Bhogal, Arun Trivedi
16. Common Irregularities in Documents
Abstract
It is essential that documents called for in a documentary letter of credit comply correctly and are in accordance with the terms of the credit. However, mistakes do occur and these cause extra work for the exporter and the bank(s) involved. This extra work causes delay in receiving payment from the importer/bank, and may involve extra cost for the exporter. The irregularities/discrepancies can be avoided by paying due attention.
Tarsem Bhogal, Arun Trivedi
17. Bank Guarantees and International Bonds
Abstract
Guarantees and international bonds are two separate subjects. A guarantee is usually an undertaking given by a person/guarantor as security for a credit facility offered by a creditor/bank to a borrower. An international bond is an undertaking given by a bank or issuer at the request of its customer (contractor/supplier) in favour of a project owner or beneficiary/buyer in another country.
Tarsem Bhogal, Arun Trivedi
18. SWIFT and Letters of Credit
Abstract
SWIFT is a global member-owned cooperative, headquartered in Belgium. SWIFT’s international governance and oversight reinforces the neutral, global character of its cooperative structure. SWIFT’s global office network ensures an active presence in all the major financial centres.
Tarsem Bhogal, Arun Trivedi
19. ICC DOCDEX Rules
Abstract
The International Chamber of Commerce initiated a system giving expert opinion in matters of disputes in the international trade, which have increased over the years. The increasing number of discrepancies in documents and resultant disputes between the parties involved in documentary credits necessitated evolution of a system for dispute resolution. The amount of commercial crime as ICC has put the value of Frauds at over multi-million US Dollars per day but it may be an underestimation. DOCDEX Rules Prescribed by International Chamber of Commerce (ICC):
Tarsem Bhogal, Arun Trivedi
20. UK Export Finance
Abstract
The term “ECGD” stands for Export Credit Guarantee Department. It is a separate department of the British Government. It was set up in 1919 to help British exporters to export goods to other countries. Like any other country, the UK also needs foreign exchange but there are more risks in exporting overseas than selling in the local market. The manufacturers and services providers are not willing to take such risks in selling their products and services overseas. The ECGD encourages the exporters to export more of their products and services by providing insurance against the commercial and political risks of not being paid by overseas buyers after goods were exported. A section of ECGD dealing with exporters trading on short terms of credit basis (i.e. up to two years) was sold to Atradius (formerly NCM Credit Insurance Limited) in 1991.
Tarsem Bhogal, Arun Trivedi
21. Marine InsuranceMarine Insurance
Abstract
Marine insurance began in the cities of Northern Italy, about the end of the twelfth century. Italian merchants came to the UK in the thirteenth and fourteenth centuries and brought with them their trading customs, including marine insurance. Initially merchants entered into marine insurance contracts as incidental to their general trading activities and later specialised in this business.
Tarsem Bhogal, Arun Trivedi
22. Innovative Non-traditional Finance
Abstract
Supply Chain Finance is an innovative way of financing where large companies help their supply chain access credit at a much lower cost and improve cash-flow. It has already been successfully implemented by companies including Rolls Royce and Vodafone in the UK scenario. The arrangement has full support and backing of the UK Government to encourage and promote jobs and boost growth of SMEs in the UK and enabling such establishments to compete in the global spectrum.
Tarsem Bhogal, Arun Trivedi
23. BREXIT
Abstract
The second decade of twenty-first century acknowledge many a political and economic developments all over the world including, “BREXIT” in Europe and “NAFTA” in North Americas. This chapter address a few features and facts that have surfaced relating to the subject matter.
Tarsem Bhogal, Arun Trivedi
24. Blockchain Technology and Trade Finance
Abstract
A basic question before a student interested to know the subject of international trade finance is what really the blockchain technology is and how this technology has relevance to this subject? And also the related queries of an inquisitive learner of international trade inter alia, how blockchain mechanism operates, parties thereto, can the system reshape trade finance and ensure safe and secure conduct of business, envisage future state vision and regulatory support, scalability, inherent or probable advantage with concern to disadvantages/limitations of the system.
Tarsem Bhogal, Arun Trivedi
25. Money Laundering and Sanctions
Abstract
Money laundering poses international and national security threats through corruption of officials and legal systems, undermines free enterprise by crowding out the private sector, and threatens the financial stability of countries and the international free flow of capital. Undeniably, the revenue produced by some narcotics-trafficking organizations can far exceed the funding available to the law enforcement and security services of some emerging market countries.
Tarsem Bhogal, Arun Trivedi
Backmatter
Metadaten
Titel
International Trade Finance
verfasst von
Tarsem Bhogal
Arun Trivedi
Copyright-Jahr
2019
Verlag
Springer International Publishing
Electronic ISBN
978-3-030-24540-5
Print ISBN
978-3-030-24539-9
DOI
https://doi.org/10.1007/978-3-030-24540-5

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