natwest.com 5 th March 2015 Trade Finance ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER DEBT SECURED ON IT. Security may be required. Product fees may apply. Over 18s only.
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Andy young natwest presentation to ukti 5th march 2015
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natwest.com
5th March 2015
Trade Finance
ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME,
MAY BE REPOSSESSED
IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER DEBT
SECURED ON IT.
Security may be required. Product fees may apply. Over 18s only.
Today’s Presentation
1. Introduction to Natwest South West Trade Team
2. Trade Finance at Natwest
3. Overview of Trade Finance Products Mitigating Risks
4. Product Overviews (what they are and how they work):
Documentary Collections
Documentary Letters of Credit
Bonds and Guarantees
Standby Letters of Credit
Pre-Export Finance
Post-Export Finance
5. UK Export Finance
Natwest working with UK Export Finance
2 ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME,
MAY BE REPOSSESSED
IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER DEBT
SECURED ON IT.
Security may be required. Product fees may apply. Over 18s only.
Receive Order Manufacture for Export Ship Collate & Prepare Export
Documents Receive Payment
Pre-shipment Finance Bonds & Guarantees and
SBLCs
Post-shipment and LC
Finance, Bill Discounting,
Receivables Purchase
Export L/Cs – Sight/Usance
B&Gs and SBLCs
Export & Direct Collections
Document Prep Services
Order Goods Receive Shipping Documents Receive Goods Make Payment
Depending on your situation there are a wide range of products to support your trading activities
Documentary Collections
7
5) Documents
Seller/Exporter Buyer/Importer
Exporter’s Bank
(Remitting Bank)
Buyer’s Bank
(Collecting Bank)
1) Contract of Sale
2) Ship goods
3) Sends documents
4) Documents
7) Payment/Acceptance
8) Payment/Acceptance 6) Payment/Acceptance
Documentary Letters of Credit
8
Seller/Exporter Buyer/Importer
Exporter’s Bank
(Advising Bank)
Buyer’s Bank
(Issuing Bank)
1) Contract of Sale
5) Ship Goods
6) Doc Presentation
7) Doc Presentation
3) L/C
4) Advice of L/C
10) Payment/Acceptance
2) L/C Application
8) Payment/Acceptance
11) Docs Provided
9) Payment/Acceptance
Bonds and Guarantees
9
Commonly used bonds and guarantees
Performance
Guarantee
In the event of failure to fulfil the contract, we will pay out either a percentage (usually 5-10% of the value of the
contract), or a fixed sum to the beneficiary
Usually required for the duration of a contract, plus a grace period to allow the beneficiary to make a demand in
the event of non-performance of the obligations covered by the guarantee
Tender Guarantee /
Bid Bond
Often called for in support of contract tenders, particularly in international trade situations
Provides the beneficiary with a financial remedy if the applicant fails to fulfil any of the tender conditions. Usually for 5-
10% of the value of the tender
Advance Payment
Guarantee
Used where the applicant calls for the provision of a sum of money at an early stage of the contract
The beneficiary can recover the amount paid in advance, or part thereof, if the applicant fails to fulfil their underlying
contractual obligations.
VAT / Duty Deferment
Guarantee
Provided to HM Revenue & Customs enabling the applicant to import goods from outside the EU without the
immediate payment of duty or tax
Shipping Guarantee Issued to allow an importer to take possession of goods from a shipping company when the goods arrive at port
before the negotiable Bill of Lading is received. It is a written indemnity by the bank to the shipping company.
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Standby Letters of Credit (SBLCs)
10
Irrevocable undertaking issued by a bank for account of its client (the applicant) in favour of a third party (beneficiary) that provides payment to the beneficiary in the event of default by the applicant
In case of default
Trigger event e.g. non-payment by buyer
Applicant
(Buyer)
Beneficiary
(Seller)
Issuer
(Applicant’s Bank)
1) Contract of Sale
2) Application for SBLC 3) SBLC
4) Documents
5) Payment
7) Documents
6) Debit
11
We could provide you with finance to bridge this funding gap
Pre-Export Finance Working capital funding to help source, produce, package and ship your goods sold
Pre-export finance can cover a range of uses, for example, to cover
the cost of raw materials or extra labour you need to fulfil a new
contract.
Repayment is generally made from the sales proceeds; when your
customer pays you, the loan is repaid. So transactions are self-
liquidating
Benefits of Pre-Export Finance… Key Features…
Improve your working capital
Facility may be increased to grow with your business
Attractive source of financing - usually achieves more
competitive financing terms compared with existing
working capital sources
Available for commodities (traded or untraded) and
other goods
ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME,
MAY BE REPOSSESSED
IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER DEBT
SECURED ON IT.
Security may be required. Product fees may apply. Over 18s only.
12
Post-Export Finance Accelerate the receipt of funds once you have shipped the goods to your buyer
This allows you to offer your clients payment flexibility, such as
extended payment terms, that you might not otherwise be able
to fund from existing cash flow
By offering flexible payment terms you may be able to secure
more contracts
Benefits of Post-Export Finance… Key Features…
We could provide you with a loan to bridge this funding gap
Reduces Days Sales Outstanding (DSO), improving
your liquidity and working capital position
Attractive source of financing – lending against trade
documents is typically priced more attractively than a
direct overdraft
Funding can be structured without recourse allowing for
improved balance sheet management
ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME,
MAY BE REPOSSESSED
IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER DEBT
SECURED ON IT.
Security may be required. Product fees may apply. Over 18s only.
UK Export Finance Programme Summary
13
Snapshot of the programmes offered to UK exporters
ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME,
MAY BE REPOSSESSED
IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER DEBT
SECURED ON IT.
Security may be required. Product fees may apply. Over 18s only.
UK Export Finance guarantees export letter of
credit (L/C) obligations in connection with
eligible UK exports
Letter of Credit Guarantee Scheme
Features:
LCs with repayment terms of up to 1 year
Exports must be from the UK
Risk sharing up to 90% of the L/C amount
Exporter’s eligibility will be subject to our normal