International Trade Finance
Course Description
This course provides an overview of essential skills for managing financial transactions in an international trade. It covers practical applications of trade finance including: political and economic risks; foreign exchange tactics and risks; credit and payment risks; optimal terms of payment; arranging financing; and setting the business’s overall financial plan. Material is presented in the form of readings, e-lectures, practical applications, and self assessments.
Learning Objectives
After completing this course, students will have covered material included in the marketing section of the North American Small Business International Trade Educators (NASBITE) Certified Global Business Professional (CGBP) examination, including:
- Assessing political and economic risks and cultural issues of the target country to establish the financial costs and viability.
- Evaluating foreign currency exchange risk and selecting, implementing, and managing risk mitigation techniques to protect the company against fluctuation of foreign exchange.
- Researching and analyzing credit history and payment capacity of the potential buyers/partners to assess the commercial risk of the buyer
- Establishing the most appropriate methods and terms of payment
- Selecting appropriate methods, terms, and currency of payment to agents, sales representatives, distributors, suppliers, and international joint ventures.
- Developing a short, medium and long-term financial plan
Breadth of Assignments
This course uses a variety of methods to explore Global Marketing including: online reading assignments, online e-lectures, web resources provided to support particularly challenging subject matter, self-assessment quizzes, individual activities ranging from Java and Flash-based interactive exercises to writing assignments and real world examples. The course concludes with a comprehensive multiple choice examination modeled after the NASBITE CGBP examination.
Required Resources
No textbook is required for this course; all required reading material is contained within the course or from external websites. A high-speed internet connection is not required but is recommended.
Topic Areas
Topic 1: Political, Economic and Cultural Risks
- Political and economic risks causing late and/or non-payment from overseas markets
- Cultural issues impacting payment methods, money transmission, credit control procedures, etc. Resources for determining risk
Topic 2: Foreign Exchange Risk and Mitigation
- Foreign exchange risk defined
- Mitigation techniques and required documentation
Topic 3: Researching, Analyzing and Mitigating Credit Risk
- Sources of credit reports
- Cost and value of credit reports
- Commercial risks of late and/or non-payment from overseas buyers
- Methods of payment
- Mitigation techniques
Topic 4: Optimizing Methods of Payment and Documentation
- Most common methods of payment
- Interpreting commercial, economic, and political risks of buyer and buyer’s country
- International regulations published by the International Chamber of Commerce governing international transactions and methods of payment
- Methods of funds remittance
- Types of letters of credit
- Types of payment
- Documentation requirements
- Financial and legal costs
- Electronic communication of letters of credit, collections, and associated documents
Topic 5: Payment Terms
- Understanding terms and conditions of purchase or sale
- Resources to aid in optimizing terms
Topic 6: Developing the Short, Medium and Long-term Financial Plan
- Resources to assist in developing a plan
- Forms of short-term financing
- Forms of medium- and long-term financing
- Optimal approaches
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