Several ways of trade financing

Trade financing refers to short-term financing or credit facilities related to import and export trade settlement provided by banks to importers or exporters. Here are several ways to introduce knowledge about trade financing, let's go into details together.

1. Credit opening:

It means that the bank opens a letter of credit for customers to reduce the deposit within the credit line.

2. Import bill:

refers to the short-term financing provided by the issuing bank to the applicant to pay for the letter of credit when it receives a full set of documents conforming to the letter of credit. Import bills of exchange are usually operated in conjunction with trust receipts. That is to say, the issuing bank releases the documents under the L/C to the applicant on the basis of the trust receipt issued by the applicant to the bank, and the applicant handles the delivery, customs declaration, warehousing, insurance and sales in advance without payment, and pays the L/C amount and related interest paid by the bank with the funds returned after the goods are sold. Due to the trust receipt, the issuing bank and the applicant form a trust relationship, and the bank reserves the beneficiary right of the sales income of the goods under the documents. The applicant has the legal ownership of the documents and can dispose of the goods under the documents.

3. Delivery guarantee:

refers to the guarantee document issued by the issuing bank to the carrier or its agent at the importer's application to bear the liability for compensation caused by the early delivery of goods when the goods arrive at the destination before the shipping documents in the import trade settled by letter of credit.

4. Export bill service:

refers to a trade financing service in which the beneficiary of a letter of credit pledges a full set of shipping documents to the local bank after the goods are shipped, and the bank pays the payment to the beneficiary in advance after deducting interest and related expenses, and then claims compensation from the issuing bank to recover the payment.

5. Packaged loan:

It means that after the exporter receives a valid letter of credit opened by the bank where the importer is located without negotiation, he applies to the bank with the original letter of credit, so as to obtain short-term RMB working capital financing for the production, procurement and shipment of export commodities under the letter of credit.

6. Discounting of foreign exchange bills:

It is a bill financing behavior handled by banks for holders of foreign exchange bills. Before the maturity of foreign exchange bills, the banks deduct the discount interest from the par value and pay the balance to the holders of foreign exchange bills.

7. International factoring financing business:

It refers to that under D/A and O/A in international trade, the bank (or export factor) authorizes and purchases the exporter's accounts receivable through the agent bank (or import factor) by conditionally waiving the right of recourse, so that the exporter can obtain the guarantee of recovering the payment after export.

8. Forfaiting:

Also known as bill package purchase or bill buyout, it means that banks (or package buyers) discount the long-term acceptance bills or promissory notes held by exporters in the deferred payment mode of international trade without recourse (that is, buyout).

9. Export buyer's credit:

It is a medium-and long-term credit granted to foreign borrowers, which is used for importers to pay the goods and technology of China exporters. The loan object is the importer's bank, which is approved by China Industrial and Commercial Bank to import goods from China, and it can also be an importer under special circumstances. The export equipment supported by the loan should be mainly made in China.

There are various trade financing methods, so choosing the right trade financing method according to your own situation will get twice the result with half the effort.

investment and financing research guidance, which provides professional research guidance on project investment, project financing and other related aspects to help you analyze the reasons for the success or failure of enterprise and project financing, so that you can avoid detours in financing and successfully obtain financing funds.

development status/trade financing

China commercial banks have extensive operation and management of financing business, and have not fully established strict standards and standardized business operation procedures for various financing businesses. The basic forms of international trade financing business are mainly the issuance of letters of credit with reduced margin, export packaged loans, import and export bills, while more complicated businesses such as international factoring account for a small proportion, and the volume of international trade financing business is very uncoordinated compared with the space provided by the market. Therefore, we must learn from the experience and lessons of international trade financing and analyze the causes of financing risks in combination with the reality of China.

insufficient understanding of the importance and risks of trade financing business

First of all, the senior managers and relevant departments of commercial banks lack understanding and experience of international trade financing business, and generally have a superficial understanding of the risks of international trade financing business, which shows two tendencies: First, they mistakenly believe that international trade financing can earn handling fees and financing interest from customers only by lending documents or opening letters of credit, which is a zero-risk business, which directly led to the 199s. Second, when there are problems, it is considered that the risk of international trade financing is great, and the measures taken make it more difficult to grant credit for international trade financing than ordinary loans, and the approval time is long, which restricts the development of this business.

Secondly, the traditional business of commercial banks is local currency business, and the proportion of international business is relatively small, so that most people think that instead of spending a lot of manpower, material resources and financial resources to develop international trade financing, it is better to concentrate on local currency business. In addition, there is insufficient understanding of the role of international trade financing business in improving the profitability of banks and optimizing the quality of credit assets, and it is considered that the number of trade financing business in the whole credit assets is small and its role is not significant.

There is a lack of effective prevention and management system within banks, and the means of risk control are backward

The risks involved in international trade financing business include customer risk, national risk, foreign agency risk, international market risk and internal operation risk. The management of these risks requires advanced technical means to effectively and organically link the relevant departments and branches of banks. China Bank, on the other hand, is relatively backward in the handling procedures of foreign exchange business, with different branches and departments operating independently of each other, lacking the sharing of network resources and unified coordination and management, thus failing to achieve the purpose of sharing resources, monitoring risks and restricting each other. For example, a department of the international business department undertakes credit risk control, business operation risk control and business development for financing business. Risk control is not only weak, but also lacks internal mutual restraint and professional risk control. Faced with the objective realization that China's import and export enterprises are generally operating losses and have a large number of bad bank debts, the trade financing of banks has great risks.

disorderly competition in financing business undermines risk management standards

China has been engaged in international trade financing business for a relatively short time compared with foreign countries, the market is not mature, and various restraint mechanisms are not perfect. With the increasingly fierce competition in international settlement business of commercial banks, the business forms of various banks are relatively single. In order to gain greater market share, they are competing to attract customers on preferential terms, and the credit review and requirements for corporate customers are getting lower and lower, relaxing the control of trade financing risks. For example, some banks have reduced their opening. Some even take credit to open letters of credit, free of deposit; Some open long-term letters of credit when the margin is insufficient and the guarantee or mortgage procedures are incomplete. These practices undermine the standards of risk management and aggravate the risks of bank trade financing business.

The marketing team is weak, and there is a lack of compound high-quality business personnel

The international settlement business is highly professional, which requires high quality of business personnel. However, China Commercial Bank lacks talents in international trade financing, and the limited talent resources are highly concentrated in the management. At the same time, the knowledge structure of talents is single. Because all banks operate international business as an independent business, the international business department is responsible for international settlement and joint trade financing business in terms of institutional setup. As a result, the relevant employees are only familiar with international settlement, but lack business knowledge in financial accounting and credit management, unable to accurately judge and master customer credit from financial data and business style, and unable to fully grasp every link of the whole process of international trade financing, which reduces the product function and market effect of international business and lacks strong control over its risks.

the legal environment of international trade financing business is not perfect

international trade financing business involves international financial bills, goods rights, mortgage, pledge, guarantee and trust of goods, which requires specific legal definitions of rights and responsibilities of various acts, but China's financial legislation obviously lags behind the development of business. Some commonly used terms and practices of international trade financing have not been regulated in the laws of China. For example, what is the right of the bank to the documents and goods in the bill of lading business, what is the bond relationship between the bank and the customer, whether the trust receipt commonly used in the import bill of lading is valid, and whether the bill accepted by the bank in the forward letter of credit business can be paid by the court. Therefore, this imperfect legal environment has further increased the risk of China's trade financing business.

development countermeasures/trade financing

improve the understanding of developing international trade financing business

with the further opening up of China, international trade is becoming more and more frequent, and the total import and export volume will be greatly increased, which will certainly provide great market space for developing foreign exchange business, especially trade financing business. Commercial banks at all levels should renew their concepts and improve their understanding of developing foreign exchange business, especially international trade financing business. Starting from the severe challenges after China's entry into WTO, we should actively develop international settlement business with trade financing business as a tool, adjust our business strategy and working ideas, and pay close attention to the trends of foreign banks. Therefore, commercial banks should strengthen market information search and adopt various policies and measures that are conducive to promoting the development of international settlement business.

The principle of separation of loan review is applied in adjusting the institutional setup

In order to meet the needs of business development, it is necessary for banks to adjust their internal institutions, redesign the operation mode of international trade financing business, separate the loan review mode, and implement credit line management, so as to effectively control risks and actively serve customers. ① It should be made clear that trade financing belongs to credit business and must be included in the credit management of the whole bank. The credit department evaluates the credit standing of trade financing customers, and initially establishes the credit standing limit of customers. By establishing a system of separation of loan review, the credit department, the credit examination and approval committee and the international business department will be responsible for the credit risk and international settlement risk, and finally the separation of loan review and special risk control will be achieved under the unified comprehensive credit management system, so as to take different measures to control property rights and achieve the purpose of preventing and controlling risks. The following points should be grasped in the credit line: first, the credit line should control the proportion of forward letters of credit, and the longer the term, the greater the risk; The second is to control the full exemption ratio of letters of credit, and strengthen the restraint and control of customer business by paying a certain margin; The third is to establish an assessment period; Fourth, implement the management of the divided credit line under the total credit line; Fifth, establish and improve the internal control system, track the import and export credit lines of basic customers, and strengthen the coordination and cooperation within the department.

establish a scientific risk management system for financing trade

formulate customer evaluation standards that meet the characteristics of international trade financing, and select customers who have been engaged in international trade for a long time and have good credit. There are many risk factors that affect international trade financing by establishing credit approval center and trade financing business department, so preventing risks requires commercial bank personnel to have knowledge of credit business to analyze and evaluate customers' credit. So as to take advantage of talents to prevent and resolve various business risks beforehand.

Improve the risk supervision in the whole process of system implementation

(1) Make pre-lending preparations, establish pre-lending risk analysis system, strictly review and approve the financing credit line, control operational risks, and find unfavorable factors in time by analyzing credit risk, market risk, natural risk and social risk, national macroeconomic policy risk, exchange rate risk, etc., and strictly review the credit information of applicant enterprises, issuers and issuing banks.

(2) Strict management of letter of credit business. Letter of credit has always been regarded as a more reliable way of settlement in international trade. Auditing letters of credit is the primary responsibility of banks and import and export enterprises. First of all, we must carefully examine the authenticity and validity of the letter of credit, and determine the type, purpose, nature, circulation mode and whether it can be implemented; Secondly, review the credit standing, capital institution, capital strength and business style of the issuing bank and understand the real credit line; Third, it is necessary to know the product price, delivery mode, shipping documents and so on in time, so as to have a comprehensive evaluation of the applicant's business operation and an objective judgment on his expected repayment ability and whether there is fraudulent purpose; Fourth, we should carefully examine the transferable letter of credit, strictly examine the credit standing of the issuing bank and the transferring bank, and examine the terms of the letter of credit.

(3) Establish a sound legal protection mechanism as soon as possible and act in strict accordance with the law. We should strengthen the research on the existing relevant legislation, find out the unsuitable places in combination with the actual work and the future development trend, and call for the improvement of relevant legislation as soon as possible through relevant channels. Use legal weapons to maximize the protection of bank interests and reduce risks.

Strengthen cooperation with foreign banks

Under the situation that many foreign investors are optimistic about the China market and foreign trade is developing well, state-owned commercial banks should seize this favorable opportunity, jointly explore and occupy China's foreign exchange business market with relevant foreign banks based on the interests and interests of * * *, and strive for some large projects that use foreign capital to settle in China, and expand the trade financing business of China Commercial Bank in various ways and at different levels.

awareness and ability to prevent financing risks

international trade financing is a business with wide knowledge, strong technology and complicated operation, which requires high professional quality of relevant employees. China has been engaged in this business for a short time, and it is in urgent need of compound professionals who are familiar with international practices, operational techniques and credit business. The competition of international settlement business of commercial banks is essentially the competition of bank management level and personnel quality. Therefore, it has become a top priority to improve the quality of trade financing managers and enhance their awareness and ability to prevent risks. A group of talents familiar with international finance, international trade and law should be trained as soon as possible. First of all, to introduce high-level and high-quality talents, we can make full use of the advanced technology of agency banks, choose relevant topics and invite experts from agency banks to give special lectures, and if possible, we can also send employees to study in foreign commercial banks. Secondly, in the usual work, we should pay attention to the summary and analysis of cases, accumulate experience in time, consciously strengthen the study of international trade knowledge and transportation insurance business, pay close attention to the international trade market dynamics, understand and master the market changes of commodities, cultivate insight into the international trade market, enhance the ability to identify potential risks, and continuously improve our business level. The third is to do a good job in job training and constantly improve the service quality and moral cultivation of employees. Fourth, strengthen risk awareness, constantly improve employees' ability to detect counterfeiting and prevent counterfeiting, and strive to prevent and resolve international trade financing risks.

expand knowledge: what international trade financing business of commercial banks includes

international trade financing business of commercial banks includes letters of credit (including international and domestic letters of credit