introduction to finance
IAE Finance courses
IAE Finance courses
Kartei Details
| Karten | 57 |
|---|---|
| Sprache | English |
| Kategorie | Finanzen |
| Stufe | Universität |
| Erstellt / Aktualisiert | 15.10.2017 / 07.03.2018 |
| Weblink |
https://card2brain.ch/box/20171015_introduction_to_finance
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| Einbinden |
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Cycle of production Credits:
>you get the goods as guarante
By Cash or by signature!!!
Working capital line of credit
o Store – production – store
o Can be extended to buying and selling > but cut it down to import/export credit (if you are a “small” company) because you can get a better deal
Trade finance facility
o Buying raw material and selling the product
o Some banks are specified and interested in this kind of credits because of: Receivable – is a guarantee to get a receivable financing like promissory not which can be traded
Import or export facility
o Import raw material / export the product
Receivables financing
o (In the cycle of Paying the product) à bank is interested in this because they really know what they are get…
long term credit (LTC)
Investment
Every project is finances diffrent. you get the product as guarantee
Credits by signature (description)
Bank says I will pay instead of my customer. It is not a money Credit, but it can become one. (The bank pays only when the customer really need it.)
Credit by signature 1% (commitment)à can be transfer in credit in cash 5%
-->helps to finance production or the sale of product.
· Guarantees
· Bonds
· (Import) letter of credit
· Bank acceptance (e.g. promissory note, letter of exchange)
· SBLC
typs of Credit by signature
Financial guarantee
- Guarantee against documents
- First demand guarantee
- SBLC
Contract Bonds
- bid bond
- performance bond
- advance payment bond/down payment
- maintenance bond
- Retention Guarantee
Guarantee against documents
A bank guarantee is a written contract stating that in the event the primary pay, the buyer, is unable or unwilling to pay it’s due to the supplier, the bank as guarantor to the transaction payment would pay its clients ‘debt to the supplier.
o In a bank guarantee the initial claim is till settled primarily against the bank’s client and not the bank itself. Should the client default, only then, the bank would agree to pay for its client’s debts on behalf of its client
o The bank generally requires documentary evidence such as a statement detailing the basis for and amount to support the claim for payment.
First demand guarantee
o With a first demand guarantee the issuing bank has to pay the claims based on a written demand for payment only.
o The beneficiary need not present any other evidence but a formally correct claim for payment mentioning the guarantor’s obligation of payment.
SBLC
Stand by letter of Credit
In case of a default, it is defined as an assurance or a type of guarantee that the seller will receive his correct payments by the bank --> secondary payment mechanism
(LC ist assurance for payment by the client --> primary payment mechanism)
Contract Bonds
file!!!!
other credits
Risk capital
countertrade
- Barter
- counter purchase
- offset
Project financing
commodity finance
Risk capital
Risk capital (5-6 years). The bank becomes the shareholder and takes the largest part of the company and also the bigger part of risk. After the 5 years you get your company back.
à when everything works out I will have the money to buy back my company. The conditions of buy-back must be negotiated while making the contract before the project. (you lose 5 years of profit but work for the future.
Forfaiting bank
In trade finance, forfaiting is a financial transaction involving the purchase of receivables from exporters by a forfaiter.[1] The forfaiter takes on all the risks associated with the receivables but earns a margin
countertrade
trade in which goods or services are exchanged for other goods or services, rather than for hard currency. International trade conducted in this matter is more common in lesser-developed countries with limited foreign exchange or credit facilities. Countertrade can be classified into three board categories:
- Barter
- Counter purchase
- offset
barter
Services and goods
between two ministries of countries. We give rice and you give meat in exchange
counter purchase
we buy service/product and they also buy service/product in the same amount. (difference to barter: we can mix different countries/goods but in the end of the contract (1 year) I have to use the whole amount.
offset
I sell you the shoe-factory and I buy your product or I help you selling your product ????
e.g. Let us take an example that an aircraft manufacturer sells a passenger plane to a buyer in another country and agrees with the buyer that some of the spare parts of the plane will be ordered and purchased in buyer’s country and attach to the plane
Project financing
You have different sponsors which provide 20% of the whole amount.
80% can be finances by syndicates of banks
The syndicate will be replayed by the profit of the project. à and the sponsors don’t receive any money till the whole syndicate will be totally repaid. But afterwards the full profit goes to the first investors (the sponsors) à the sponsors must wait very long till they get something out of the project
àLike the train around London
commodity finance
Raw material become commodity, because of international market. (The quality, the price, and the stock place are all over the world the same and accepted.) àe.g. oil
Great field for the bank (boat of oil) has to be financed à the bank knows the quality of the oil and likes to give money for it. Big benefits.
