Through TRADEFINANCE2020 an exporter can offer a truly competitive edged to importers availing a payment tenor of 180 to 360 days (sometimes even much longer) on transactions of up to Euro 35 million if these basic requirements can be met:
• The Importer will have to be able to issue a L/C or DLC through his own bank
• Exporter and Importer have to have an established solid business track record
How can TRADEFINANCE2020 enable below market rates?
TRADEFINANCE2020 is different to most government supported credits, as it allows exporters to subsidize the interest rate charged to their importers.
How can I get a quote?
First we have to see if your transaction can be acceptable under the terms of TRADEFINANCE2020. To evaluate your transaction and our possibilities to advance cash funds on your transaction for your client, the importer, you will have to present your proposed business deal using our INITIAL-EVALUATION-FORM. If your transaction is acceptable in principle, we will be able to provide you with an indicative quotation. By answering this brief one-page questioner you will submit only very basic information like amount, currency, tenor, country, obligor, guarantor, underlying transaction, and shipment schedule.
How can I get a financing commitment?
If you are reasonably confident of being awarded the contract, and you want to fix the discounting costs, TRADEFINANCE2020 may be in a position to grant you an option. The option is a commitment given for a determined period of time. It fixes all the discounting conditions and allows you to sign the commercial contract with the certainty that you will be able to sell the debt instruments, without recourse after you have completed delivery of the goods or service using resources we have available from the KIPCO Group. If the contract is awarded to you before the expiration of the option, the option automatically turns into our firm Non-Recourse Funding commitment.
How quickly can I get a quote or a commitment?
We understand that this type of business requires fast action. Depending upon the complexity of the deal, and the country (-risk) involved, we are able to provide a quotation usually within 48 hours. We understand that your commercial negotiations are often very fast moving, and as such, we can usually provide a very quick indication for countries that are constantly monitored and on our list. Market conditions can be highly volatile and the list of countries where we are able to avail TRADEFINANCE2020 will change in accordance with economic and political developments. Currently financing is provided in over 100 countries world-wide.
At what stage can you commit to a transaction?
Depending on the specific transaction, we may be in a position to arrange the commitment to purchase receivables up to 18 months prior to delivery. If interest rate risk is of concern to your company, under TRADEFINANCE2020 we may be able to arrange a commitment to discount the debt at a fixed rate. This will protect you from adverse movements in interest rates during the manufacturing and delivery periods.
Why do you need a DLC or LC?
This guarantee will be the Non-Recourse funding instrument on which TRADEFINANCE2020 is based. Any importer with a good relation with his own bank will be able to get a DLC or an LC issued by his bank at a very low rate. It is definitely more difficult and expensive to obtain a cash loan to pay for the imported products. In many emerging markets, companies and banks alike may have significant difficulty in borrowing medium term fixed rate money. The local bank, because of its relationship with the Importer plays a key role by issuing a DLC or a L/C, thereby allowing its customer to access foreign sources of funding. As a result, even if the Importer could obtain a fixed rate medium term loan, the interest rate is likely to be prohibitively high. TRADEFINANCE2020 represents a truly low cost financing model for importers requiring a tenor of 180 to 360 days or longer.
Does the Importer have to make a down payment on the shipment?
TRADEFINANCE2020 is a No-down-payment deal. 100% of the value of the commercial contract is usually financed on a Non-Recourse basis.
When does the exporter get paid under TRADEFINANCE2020?
It is in everyone's interest to accelerate the payment as much as possible. Clearly there will be a thorough a checking process, but with your assistance and the cooperation of your client and their bank, in most cases payments are made within a very reasonable time of presentation of complete documentation.
What happens if the Importer does not pay it's debt at maturity?
Under TRADEFINANCE2020 the debt is purchased without recourse and the exporter is not responsible for repayment at maturity. Also to avoid such an unpleasant event the terms of this facility requires the guarantee instrument to be drafted in a way that will assure that there cannot be a default, or a later claim resulting in a legal dispute.
If the EXPORTER presents the Shipping Documents to your Bank for payment, how then will the IMPORTER get to clear Goods at the destination port, OR do you later send the Original Documents to the IMPORTERS BANK (DLC issuing Bank) to proceed with the process of goods clearance as you await for the expiry of the Credit Period?
If deferred payment LC and we have added confirmation and will be discounting, then once exporter has presented compliant documents to us we will discount and pay proceeds to the exporter. All documents, including shipping docs, will then be sent to the LC issuing bank for them to pass to their client, the buyer/importer.
Where Standby LC and BoE used, then the exporter will provide us with all documents including BoE and shipping docs, which we then forward to the bank of the buyer/importer. The bank will be instructed to release all documents to the buyer on their acceptance of the BoE.
The accepted BoE will be returned to us, and on our receipt we will discount paying proceeds to the supplier/exporter.