Main methods of international trade financing

Trade financing methods can be divided into the following types: 1. Credit issuance: refers to the bank issuing a letter of credit for customers by reducing or reducing the deposit within the credit limit. 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 complete set of matching documents under the letter of credit. Import bill transfer is usually operated in conjunction with a trust receipt (TrustReceipt, T/R). That is to say, the issuing bank releases the documents under the letter of credit to the applicant based on the trust receipt issued by the issuing bank to the bank. The applicant first handles delivery, customs declaration, warehousing, insurance and sales without payment, and The funds returned after the sale of the goods are used to pay the amount of the letter of credit advanced by the bank and related interest. The issuing bank and the applicant for the issuance of the certificate have a trust relationship due to the trust receipt. The bank retains the beneficial rights to the sales revenue of the goods under the document. The applicant for the issuance of the certificate has the legal ownership of the document and can dispose of the goods under the document. 3. Shipping Guarantee: In the import trade settled by letter of credit, when the goods arrive at the destination before the freight documents, the issuing bank shall issue it to the carrier or its agent at the request of the importer. Guarantee document that assumes liability for compensation due to advance delivery of goods. 4. Export bill purchase business (BillsPurchase): means that the beneficiary of the letter of credit pledges the complete set of shipping documents to the local bank after the goods are shipped. The bank will prepay the payment to the beneficiary after deducting interest and related expenses, and then pay the bill to the beneficiary. A type of trade financing business in which the issuing bank makes a claim to recover the payment for goods. 5. Packing Loan: This means that after the exporter receives an unnegotiated valid letter of credit issued by the bank where the importer is located, he applies to the bank with the original letter of credit, thereby obtaining the production, procurement, and purchase of export commodities under the letter of credit. Short-term RMB working capital financing required for shipment. 6. Foreign exchange bill discount (Discount): It is a bill financing behavior that banks handle for holders of foreign exchange bills. Before the maturity of the foreign exchange bill, the bank deducts the discount interest from the face amount and pays the balance to the holder of the foreign exchange bill. 7. International factoring financing business: refers to the bank (or export factor) through the agency bank (or import factor) under the document against acceptance (D/A) and credit sales (O/A) in international trade. The exporter's accounts receivable are approved and purchased with a conditional waiver of recourse, so that the exporter is guaranteed to recover the payment after export. 8. Forfaiting: Also known as bill purchase or bill buyout, it refers to the non-recovery process by the bank (or the purchaser) of the forward acceptance bill or promissory note held by the exporter in the deferred payment method of international trade. Discounting of claims (i.e. buyouts).