Uluslararası Ticaret Finansmanı

International financing methods are summarized under 4 main headings. These:

1. Cash Financing Alternatives for Exporters
2. Cash Financing Methods Based on Credit Discounts
3. Methods of Hedging Currency Risk
4. International Resources to be Used in Import Financing

Eximbank Loans

Eximbank Loans; In order to develop exports, Turkey Export Bank A.Ş. (Eximbank) through banks or directly. It has a price advantage compared to other export credits provided by banks. Türk Eximbank has loans with different disbursement terms, both short-term and long-term, pre-shipment or post-shipment, in line with the needs of companies.

CBRT rediscount credits: Banks mediate the credits to be extended to exporters within the framework of the CBRT Law No. 1211 and the CBRT Rediscount and Advance Regulations.

Guarantees Except for Other Collateral and Financing Products Used in International Trade

External Guarantee is an irrevocable bank payment obligation issued by the bank for issues such as delivery of a good, payment of a debt, and execution of a job, addressed to persons and institutions abroad. If the commitment, which is the subject of the guarantee, is not fulfilled in due time and in accordance with the contract between the two parties; The amount specified in the letter is paid by our bank to the addressee at the first request.

If you have a credit limit at a bank, you can start using our External Letter of Guarantee service. It is recommended to send letters regarding your international transactions through banks via the SWIFT system. However, there may be printed wet-signed letters requested by the European Union Commission Units and the Public Institutions of some countries for the tenders. In such cases, especially in the process of returning the letter, obtaining the return confirmation from the authorized persons from the return authority through an electronic channel will ensure that your transactions are carried out quickly and smoothly.

counter-guarantees

Based on the guarantee issued by the beneficiary’s bank to your bank, prepared by the order of the beneficiary abroad, addressed to your company; A letter of guarantee can be issued directly to you. In addition, if you have a credit limit in a bank, your bank can provide a guarantee for these people and organizations directly from their own banks by issuing a guarantee in commercial transactions and tenders where you need to give a letter of guarantee to the people and organizations you do business with.

Collateral Letters of Credit (Stand By Letter Of Credit)

Guarantee letters of credit, just like in guarantee letters, are the irrevocable payment obligation of the bank in case a certain obligation is not fulfilled, based on the appropriate compensation demand of the addressee who declared this situation. If you have a credit limit in your bank, it is possible to open a letter of credit through your bank to the banks where these individuals and organizations work directly abroad, in commercial transactions where you need to give a letter of credit to the people and organizations you do business with. In addition, your bank may mediate and notify your company about the letter of credit issued by the beneficiary’s bank to your bank, which is prepared with the order of the beneficiary abroad addressed to your company. You can carry out your external guarantee, guarantee and letter of credit transactions in a very short time from the bank you work with through the widespread correspondent network and SWIFT system.

Credit Insurance

Trade Receivables Insurance ensures that the collection risk of short-term receivables arising from domestic or international sales is eliminated with a guarantee in the form of pool risk management in the logic of insurance, instead of guaranteeing 100% on invoice basis. The aim of the insurance is to ensure that high turnovers are secured with more affordable costs with the approach of scale economy, risk sharing and diversification.

Insurance companies can reduce limits by closely monitoring buyer risks with their extensive intelligence networks and experience. Thus, it also provides an early warning service for sellers who have transferred their buyer risk management to another institution. Your sales abroad that are not secured by a domestic bank guarantee can be arranged in such a way as to secure both the commercial risk of the buyer and the political risks of the country you export to, upon your request.

Both domestic and international receivables can be transferred to a financier by the method of assignment of receivables, discounted and converted into cash. Receivables can be insured through banks.

Forfaiting

Fortfaiting is the definitive sale of promissory notes or registered receivables, which are generally guaranteed by a bank guarantee in medium-term practice, arising from export transactions. It means the purchase of a receivable arising from a trade relationship but not yet due and secured by a negotiable instrument by a bank or a specialized financial institution (forfaiter) without recourse to the seller. The receivable is transferred with the endorsement made on the valuable paper. The market in which the first transfer of the receivable is made is called the primary market, and then the second market transaction, if it changes hands and reaches other creditors. The receivables subject to forfaiting must be guaranteed by the importer’s bank.

Advantages of Forfaiting for the exporter

It is a liquid instrument since the exporter has the opportunity to turn into cash at any time at a certain price.
Provides without recourse financing. This transaction provides an increase in the liquidity of the seller without being reflected as a loan on the balance sheet.
The exporter closes the “Trade Receivables” account.

Advantages of Forfaiting for the importer:

There is the possibility of purchasing with a longer term.
Since you have used a non-cash loan, you will be able to import without using a cash loan.
The financing opportunity that your credibility provides to the exporter enables you to create strong supplier relations.
It is carried out within the scope of the brochure numbered URF800, published as a joint work of the International Chamber of Commerce Banking commission and the International Association of Forfaiters.
The importer tracks the import order in the “commitments to banks” account until the payment due date.
factoring

It is the oldest known financing and collection method. Transfer of a receivable represented by an invoice to a factor organization by assignment and in return; collection service, collection guarantee, method of providing cash financing.

Since the receivables are not secured separately with an independent valuable paper, the assurance of the factor organization is valid after the buyer has made all the acceptances regarding the goods. Financing to be made before the final acceptance of the goods, and therefore of the debt, is carried out in a way that is recourse to the seller, since the right of the buyer to take an interim injunction regarding the goods is reserved.

In addition to providing financing by discounting your receivables with the factoring guarantee, you can also use the guarantee provided by Finans Faktoring as a guarantee for the loans you will use from our bank.

There are 4 parties in Factoring:

Exporter selling goods on credit,
Importer purchasing goods on credit,
Importer bank that issues aval for credit sales (correspondent bank)
The “factor” bank that purchased the right to receivable

Forward Rate/Forward Rate

It is a type of service that companies receive from banks in order to prevent income losses that may arise from the floating exchange rate system. In this type of service, forward-looking exchange rates can be fixed by banks against a certain expense in forward rate applications.

Forward Exchange / Forward Transaction; It is the ideal solution for companies that do not want to take the currency risk of the future foreign exchange flow and the cash flow risk that this risk will create. It is based on the determination and agreement of the foreign exchange buying/selling transaction that will take place in the future. As of the date of forward transactions, it is a binding agreement between the parties for the relevant maturity and the cash flow is realized in the specified maturity.

The purpose of this transaction is to make the cash flow calculable. For this reason, you can see the cash flow scenario that will occur in the future on the date of the agreement. Forward transactions are hedging (insurance) instruments that are hedging methods from price movements in the markets.

How to Close a Due Forward Transaction?

On the transaction date, the firm brings the amount it has sold to the bank by making a forward transaction, and closes the transaction by collecting the amount it has received from the bank.
Currency/TL Forward Transactions
The appreciation of USD against TL increases the cost of the firm that makes purchases in TL and exports in USD.
The firm sells USD today and buys TL for the future maturity of the USD to be earned from exports. Thus, it stabilizes the monthly TL return.
If the USD devaluation turns out to be lower than the TL interest rate as expected, the firm will avoid potential losses.
Currency/Currency Forward Transactions
These are forward cross currency agreements between different currencies.
Forward Rate-Forward Rate application is used to fix the daily exchange rates forward.

Country Credits

These are the credit mechanisms that provide short and medium-term financing to the companies that will import from their countries, through the relevant Export Credit Agency (ECA), in order to increase the exports to be made from their own countries by some countries. They often act as collateral for financing provided by a bank. In some cases, they provide direct financial support.

Advantages

It is very advantageous for importing companies, as the investment cost can be long-term in parallel with the recycling process and the interest rate is relatively low.
It gives companies high purchasing power.
Country loans are generally given for all kinds of investment goods. It is seen that consumption and intermediate goods are rarely funded by similar mechanisms.
Country Credits and related Export Credit Institutions

CCC, (GSMABD – Agricultural Products), US Exim (USA), Hermes (Germany), OEKB (Austria), CREDENDOGROUP (ONDD) (Belgium), EKF (Denmark), FINNVERA (Finland), COFACE (France), NCM ( Netherlands), ECGD (UK), CESCE (Spain), EKN (Sweden), SERV (Switzerland), SACE (Italy), SIMEST (Italy) JBIC (Japan), NEXI (Japan) EDC (Canada), China Eximbank (China) ), TaiwanExim (Taiwan), KEXIM (South Korea), Turkish Exim (Turkey)

International Multilateral Development Organizations

You can benefit from the brokerage services offered by Finansbank to finance your investments and projects with IFC, World Bank, European Investment Bank, Islamic Development Bank and similar resources. In addition to benefiting from the financing provided by these institutions through your bank, when you want to apply directly to these institutions, the bank you work with can provide you with consultancy and brokerage services on issues such as financing prerequisites and preparation of application documents.

Murabaha

It is an Islamic financing method that is basically based on sharing the profits in trade, in which interest-bearing debt instruments are not used. It provides the importer with an opportunity to sell in cash and buy on credit. The financing institution, which is the intermediary, buys the goods in cash on behalf of the company and makes deferred sales to the company.

The bank you work for has collaborations with financial institutions that are authorized to perform murabaha transactions. Banks can be the guarantor of the payment commitments related to the forward purchase in the murabaha contracts to be made by their customers, with the bill of sale or letter of guarantee to be given by the bank.

Foreign currency; A form of currency with economic value, including coins and notes, issued by a government and circulating in an economy. Currency, which is used as a means of exchange of money and goods, is the basis of trade.

In general, each country has its own currency. For example, the official currency of Switzerland is the Swiss franc and the official currency of Japan is the new. An exception is the Euro, which is used as the common currency in the members of the European Union.

While these currencies may be specific to a nation, some countries may accept another country’s currency as their own country’s local currency. For example, El Salvador and Panama use the US dollar as their official currency. This situation is called Dollarization, even if the currency is a different currency.

As a note from history; Although the United States began minting its own coins soon after the founding of the U.S. mint in 1792, U.S. citizens were using Spanish coins as they were heavier.

Some currencies such as cryptocurrencies, bitcoin, dogecoin and other digital and branded currencies are not tied to any country. Branded currencies such as airline and credit card points or in-game credits are valued in relation to the value of the products or services to which they are linked. Control over digital currencies is completely decentralized and the exchange rate of a digital currency can change a lot in a short time.

Bitcoin is a digital currency that has been in use since 2008, it is a decentralized consensus network for trading. On the system, users can trade between each other without intermediary, that is, transfer. The registration and reconciliation system where Bitcoin transfers are made is called Blockchain. Bitcoin is defined as (BTC) for short.

Local currencies are currencies that are valid in a particular region of a country and are used as a regional trade element and are not supported nationally. Before the establishment of national banks, there was a wide variety of local currencies in the United States.

It can be said that the IOU is the government’s issue of debt securities containing a certain amount of money instead of money. For example, the government of a country that declares its economic bankruptcy or falls into a payment bottleneck may distribute IOUs worth 1000 USD to its officers, for example, in return for a monthly salary, the IOUs will be able to be converted into money later when the conditions improve, and in the meantime, they can be used like money as a means of exchange between citizens while trading.

In most cases, a country’s central bank has the sole authority to issue currency for circulation. Along with the base currency, these banks mostly produce fractions in the form of coins. These usually appear as 1/100 and 1/4, but can sometimes be as small as 1/1000 of the base currency.

Investors often trade in foreign exchange by making foreign exchange transactions, that is, buying and selling foreign exchange in the foreign exchange market, which is one of the most traded markets in the world. The exchange rate is the rate that expresses the exchange values of two currencies against each other. These rates can be in the form of “free exchange rate” or “fixed rate”. A currency in which the currency value changes in relation to foreign exchange market mechanisms, where the currency is tied to another currency, such as gold or a basket of currencies (a combination of multiple exchange rates).

Most currencies such as US dollars, Euros, Sterlings are traded (or converted) for other currencies on the money market. Those who want to make foreign exchange transactions can generally trade in foreign exchange markets or banks without any restriction or artificially fixed price, that is, they can buy and sell foreign currency.

These currencies are considered fully exchangeable. Currencies that can be converted to each other by methods defined as cross rates or parity during international payments are called convertible money.

Partially convertible currencies are currency controlled by a central bank. Central banks sometimes do this to control hot money flows and international investment.

Non-convertible currencies are currencies that do not participate in the foreign exchange market and are not allowed to be converted. The North Korean Won is such a currency. It is generally applied by management forms that do not allow a free market economy.

It is the money that central banks, capital investment funds and financial institutions choose among the currencies that are in high demand while creating foreign exchange accumulation and portfolio and direct their savings. US dollar, Euro, Yen, Pound are the most commonly used reserve currencies.

The value of one country’s currency in terms of other countries’ currencies. The rate between two different currencies represents the cross rate.

It refers to the possible decreases and increases in the value of the foreign currency invested by the investor as a result of the value decreases and increases experienced by the exchange rates relative to each other at the end of a trading day.)

Exchange rate risk can create opportunities as it sometimes reflects predictable and expected changes in exchange rates between two countries (for example, changes in interest rates in countries). For example, if interest rates are higher in Canada, the US dollar will likely depreciate against the Canadian dollar. (This is because when interest rates rise in a particular country, international money flows into that country to generate high returns, which in turn raises the value of the country’s currency.) Currency risk also affects foreign bond investors indirectly in the foreign exchange markets.

It carries foreign exchange trading in currency. A funding currency usually has a low interest rate. Investors borrow the funding currency and take short positions in currencies with high interest rates.

The Japanese yen has historically been popular as a funding currency among forex traders due to its low interest rate. For example, a trader borrows Japanese Yen and with that money buys a currency with a higher interest rate, such as the Swiss Franc. His expectation is to earn income from the high interest money invested in the period until he returns the money he borrowed. The low-interest yen fund appears to be a safe investment tool in this example.

The interest paid by investors or investment firms when using a monetary resource that does not belong to them is called funding cost. The time value of money will be determined as the difference between the present value of 1 unit of money and its future value.