Trade Finance & Financial Institutions Services
Cross border Trade transactions and Financing arrangement
Global and local banks support international trade through a wide range of products that help their customers manage their international payments and associated risks, and provide needed working capital. The term “trade finance” is generally reserved for bank products that are specifically linked to underlying international trade transactions (exports or imports). Trade finance products typically carry short-term maturities usually ranging from 90 days to a max tenor of 360 days. For the most part, L/Cs represents off-balance sheet commitments, though they may at times be associated with an extension of credit. Our Advisors helps you in selecting the banks by securing the best discounting rates from across the globe.
Arrangement of Confirmation and Discounting of Letter of Credit
Most of the time, the beneficiary under the L/C may not believe in the credibility of the issuing bank due to the risks associated with the bank as well as applicant’s country. In such cases, another bank known as confirming bank will add its confirmation on the L/C and will solely undertake the risk under the issuing bank. The risk borne by the beneficiary will be eliminated as Confirming Bank undertakes to make payment to the beneficiary.
UPAS L/C: Usance Payable at Sight is a derivative from the standard LC type (Sight L/C & Usance L/C). It is actually the combination between Sight L/C and Usance L/C. Simply saying, UPAS is a Usance L/C that is payable sight basis to the seller (beneficiary), while the payment settlement from the applicant (buyer) to the issuing bank will made on at the end of Usance term. The exporter/ beneficiary will be paid at sight while the importer/ applicant will pay at the end of the Usance term. The Confirming/ Discounting Bank will take the risk upon the LC Issuing Bank and finance the beneficiary’s bank based on the acceptance given by the Issuing Bank to reimburse the Confirming Bank on maturity.
UPAS LC Re- Financing: If you need an extended period for making payment of your cross border trade transactions under UPAS LC (Period after current acceptance maturity), we can arrange funding for such extended Usance period. Synergy has been previously been providing such services for its clients located in emerging economies.
Structured Trade Transactions
Bank-intermediated trade finance performs two vital roles: providing working capital tied to and in support of international trade transactions, and/or providing means to reduce payment risk. The principal alternative to bank-intermediated products is inter-firm trade credit. Firms’ ability to directly extend credit is supported by possibilities to discount their receivables and the availability of financing not directly tied to trade transactions, as well as possibilities to mitigate payment risk by purchasing trade credit insurance.
Arrangement of funding against SBLCs
A SBLC which is akin to a guarantee is governed by either UCP 600 or ISP 98 published by International Chamber of Commerce. We help companies in arranging funding against the SBLCs for their funding requirements.
Arrangement of Buyers Credit
Buyer’s credit is also referred to as financial credit. In this kind of a financial arrangement, a financial institution or bank extends a loan to foreign buyers. The loan is also extended to a bank in the importing country in order to bear the expenses for purchase of goods from the exporting country. It is beneficial to local importers since they can access cheaper foreign funds.