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Core Knowledge Area 4

International Trade Finance

Evaluate financial risks and methods, select and implement most favorable methods of payment to support global activities and ensure that all related costs are included at the time of quotation. Evaluate quantity and source of finance necessary to implement global activities.

Task 4/1:

Assess political and economic risks and cultural issues of the target country to establish the financial costs and viability.

Knowledge of:

  • Political and economic risks causing late and/or non-payment from overseas markets
  • Cultural issues of buyer's country whichmay impact payment methods, money transmission methods, languages ues, credit control procedures , level of governmental control, corruption issues, and sources of finance
  • Resources for determining risks

Task 4/2:

After evaluating foreign currency exchange risk, select, implement, and manage risk mitigation techniques to protect the company against fluctuation of foreign exchange.

Knowledge of:

  • Foreign exchange risk mitigation techniques and requiremetn documentation.

 

Task 4/3:

Research and analyze credit history and payment capacity of the potential buyers/partners to assess the commercial risk of the buyer and maintain credit management and control procedures and documentation.

Knowledge of: 

  • Sources of credit reports
  • Costs, usage, and value of credit reports
  • Commercial risks of late and/or non-payment from overseas buyer
  • Methods of payment
  • Mitigating techniques

 

Task 4/4:

Establish the most appropriate methods and terms of payment and required documenation to ensure timely payemtn for the sale of goods and/or services and to faciltiate external financing.

Knowledge of: 

  • Commercial, economic, and political risks of buyer and buyer's country
  • International regulations published by the International Chamber of Commerce (Paris) governing internaitonal transactions and methods of payment
  • Methods of funds remittance
  • Types of letter of credit  and payment
  • Related financial and legal costs

 

Task 4/5:

Select appropriate methods, terms, and currency of payment to agents, sales representatives, distributors, suppliers, and international joint ventures. 

Knowledge of:

  • Terms and conditions of purchase or sale
  • Resources: Banks, U.S. government agencies, International Chamber of Commerce

Task 4/6: 

Develop a financial plan to establish whether internal/external international trade financing is required.

Knowledge of:

  • Resources: Ex-Im Bank, SBA, private banks, non-bank private sector lenders

Task 4/7:

Identify options for short-term (up to 180 days) pre-and/or post-shipment finance for the seller to ensure lowest cost financing at acceptable levels of risk.


Knowledge of:

  • Forms of short term financing

Task 4/8:

Identify options for medium and long term finance for the overseas buyer (internal/external) to allowe buyer extended terms while providing cash  payment to seller without recourse.


Knowledge of:

  • Forms of long term financing
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