Arasan - Trade Finance Consultant

  Usance LCs (Letters of Credit) are financial instruments used in international trade to facilitate payments between importers and exporters. Usance LCs allow importers to defer payment to the exporter for a specified period of time, typically 30, 60, or 90 days. Importers can benefit from usance LCs in several ways: Cash flow management: Usance LCs allow importers to defer payment to the exporter, which can improve their cash flow by providing them with more time to generate revenue or secure financing. Negotiation power: By using a usance LC, importers can negotiate better terms with the exporter, such as lower prices or longer delivery times, as they have more time to pay for the goods. Reduced risk: Usance LCs can reduce the risk of non-payment for the exporter and the importer. The exporter is guaranteed payment by the bank upon presenting the required documents, while the importer can be confident that the goods have been shipped before making payment. Enhanced creditworthiness:

In the context of project funding, a bank guarantee can be used as collateral to secure financing for a project. The bank guarantee serves as a commitment from the issuing bank to pay a specified amount of money to the lender if the borrower fails to fulfill its obligations under the contract or agreement.   For example, suppose a construction company is seeking financing for a new infrastructure project. The lender may require the company to provide a bank guarantee to secure the loan. The construction company would then approach its bank to issue the bank guarantee, which would be a commitment from the bank to pay the lender if the company fails to complete the project or repay the loan. The bank guarantee is typically issued for a fixed period of time and for a specified amount, which is usually a percentage of the loan amount. The issuing bank charges a fee for issuing the guarantee, which is typically a percentage of the guaranteed amount. The bank guarantee can be in the form of

Genuine trade finance consultancy companies may choose not to be involved in the monetization of instruments for a variety of reasons. Here are some possible explanations: Legal and regulatory risks: Monetizing financial instruments can be a complex and highly regulated activity. There are strict rules around the use of certain types of instruments, such as bank guarantees and standby letters of credit, and engaging in monetization activities may put a consultancy company at risk of violating these rules. There may also be legal risks associated with fraudulent or non-performing instruments. Reputation: Engaging in monetization activities can damage the reputation of a trade finance consultancy company, particularly if the instruments being monetized turn out to be fraudulent or non-performing. Genuine trade finance consultancy companies may prioritize their reputation and brand image over short-term financial gains. Ethical considerations: Some trade finance consultancy companies may

  International trade is a complex process that involves multiple parties, including buyers, sellers, and financial institutions. One of the critical aspects of international trade is proving that the buyer has sufficient funds to complete the transaction. This requirement is known as proof of funds. In this blog post, we will discuss what proof of funds is, its importance in international trade, and the different ways to show proof of funds. What is Proof of Funds in International Trade? Proof of funds in international trade refers to the documentation provided by the buyer or their financial institution to prove that they have the necessary funds to complete the transaction. This documentation can be requested by the seller or their financial institution to ensure that they will receive payment for their goods or services. Why is Proof of Funds Important in International Trade? Proof of funds is essential in international trade to ensure that the buyer can complete the transaction an

Possible predictions for the trade finance industry in 2023: Increasing adoption of digital technologies: The use of digital technologies such as blockchain, artificial intelligence, and machine learning is expected to increase in trade finance. These technologies can help streamline processes, reduce costs, and increase transparency and efficiency in transactions. Greater emphasis on sustainability: Environmental, social, and governance (ESG) factors are becoming increasingly important in business, and trade finance is no exception. More and more businesses are expected to prioritize sustainability in their supply chains, and trade finance providers may need to adapt to this shift. Continued growth of emerging markets: Emerging markets such as China, India, and Southeast Asia are expected to continue their rapid growth in the coming years, creating new opportunities for trade finance. However, geopolitical tensions and trade disputes could also pose risks to these markets. Increased r

How can LC help importers? Reducing risk An LC can help reduce the risk of non-payment by ensuring that payment will be made to the exporter as long as they comply with the terms of the LC. This provides reassurance to the exporter and can help build trust between the importer and exporter. Facilitating transactions An LC can help facilitate transactions by providing a secure and reliable method of payment for both parties. The exporter is assured of payment, while the importer is assured of receiving the goods they have purchased. Ensuring compliance The terms and conditions of an LC must be met before payment is made, ensuring that both parties comply with the terms of the transaction. This can help avoid disputes and misunderstandings between the importer and exporter. What are the different types of LCs? Revocable LC A revocable LC can be cancelled or amended by the issuing bank without notice to the beneficiary (exporter). As a result, revocable LCs are not commonly used in intern

The Future of Sustainable Trade Finance   Sustainability has become an increasingly important issue in the global economy, and trade finance is no exception. Sustainable trade finance refers to the practice of incorporating environmental, social, and governance (ESG) considerations into trade finance transactions. One of the key drivers of sustainable trade finance is the growing awareness of the impact that trade can have on the environment and local communities. By incorporating ESG considerations into trade finance transactions, banks and other financial institutions can help to mitigate these risks and promote more sustainable practices. Another driver of sustainable trade finance is the increasing demand from customers for more sustainable products and services. By offering sustainable trade finance solutions, banks and other financial institutions can differentiate themselves from their competitors and attract customers who are looking for more sustainable options. Arasan Trade F

The Rise of Digital Trade Finance Platforms In recent years, there has been a growing trend towards the digitization of trade finance. Digital trade finance platforms offer a range of benefits over traditional paper-based processes, including faster processing times, greater transparency, and lower costs. One of the key advantages of digital trade finance platforms is their ability to automate many of the manual processes involved in trade finance. This can significantly reduce processing times, allowing transactions to be completed more quickly and efficiently. Digital trade finance platforms also offer greater transparency, as all parties involved in a transaction can access the same information in real-time. This can help to reduce the risk of fraud and increase trust between buyers and sellers. In addition, digital trade finance platforms can help to reduce costs by eliminating the need for paper-based processes and reducing the amount of time and resources required to complete tra