International Trade Finance

INCOTERMS Incoterms, short for International Commercial Terms, are a set of standardized rules published by the International Chamber of Commerce (ICC) that define the responsibilities of sellers and buyers in international trade transactions. They clarify who is responsible for tasks such as transportation, insurance, customs clearance, and risk of loss during the shipment of goods. Here’s a short elaboration on how Incoterms play a part in import and export: Clarity and Agreement: Incoterms ensure clarity and consensus between the buyer and seller regarding their respective obligations and costs at each stage of the transaction. They prevent misunderstandings and disputes by clearly defining each party's responsibilities. Risk and Cost Allocation: They specify when the risk of loss or damage to goods transfers from the seller to the buyer. This is crucial for determining who should purchase insurance and at what point during transit. Logistics and Transport: Incoterms dictate where the seller’s responsibility for transport ends and where the buyer's responsibility begins. This includes specifying whether the seller is responsible for arranging main carriage, loading and unloading, and export/import clearance. Global Standardization: Since Incoterms are recognized worldwide, they facilitate smoother international transactions by providing a common language and set of expectations across different jurisdictions and cultures. Legal Implications: Choosing the right Incoterm can have legal implications, as it defines contractual obligations. It's essential for parties to select the appropriate term based on the mode of transport, delivery location, and desired level of responsibility. In essence, Incoterms are indispensable tools for international trade, ensuring clarity, reducing risks, and facilitating smoother transactions between parties in different countries.

The Global Payments Report 2024 Consumers have more payment options than ever before and it is the choices they make that drive the payment landscape. Explore this new choice era in the 9th edition of Worldpay's Global Payments Report, your expert guide to payments across 40 markets. Understand how consumer choices become trends and understand what these trends mean for the future of your business. 1 ) A2A Payment - Despite increasing dominance in markets like Brazil and India, A2A remains challenged in card-heavy markets such as the UK and USA. A2A’s lower cost of payment acceptance makes it popular with merchants. 2) Buy Now Pay Later (BNPL) Companies faced well-documented headwinds in 2023 including rising interest rates, looming regulation and souring investor sentiment. Consumers countered those headwinds by choosing BNPL more than ever. 3) Global E-Com Global e-commerce surpassed $6.1 trillion in 2023 and is growing at more than twice the rate of global POS value. E-com growth is projected for 9% CAGR (versus 4% for POS) through 2027. 4) Cash vs Digital Although cash fell -8% globally in 2023 and is expected to decline at -6% CAGR through to 2027, it remains relevant amid economic uncertainty. It is still a vital payments tool for billions of consumers. In 2023, cash accounted for 16% ($6 trillion) of global transaction value, including double-digit share in 30 of 40 markets in this report. 5) Prepaid Card Prepaid cards will exceed $1 trillion in global transaction value. Versatility drives prepaid cards’ success: as gift cards, reloadable stored value cards, for payroll, business-to-consumer payments and as government benefits. 6) PostPay Although it remains popular in cash-heavy LATAM and Japan, where it accounted for 5% of e-commerce transaction value in 2023, an upturn in financial inclusion and overall shift away from cash is signalling post-pay’s sunset. 7) Digital Wallets - Digital wallets are the most popular and the fastest-growing payment method globally, however consumers shop. In 2023, they accounted for 50% of global e-com spend (> $3.1T) and 30% of global POS spend (> $10.8T). 8) Card Vs Digital Payment Consumers turning to digital wallets isn’t a turn away from cards. In card-dominated markets, card spend is simply shifting to “pass-through” and “staged” digital wallets like Apple Pay, Google Pay and PayPal. Taken as a whole, card transaction values are at an all-time high and continue to rise. Feon Ang 洪雍华 | Sopnendu Mohanty | Navin Suri   | Oliver Turn | Tony Moroney | Theodora Lau Chris Gledhill   | Linas Beliūnas  | Bradley Leimer  | Huy NGUYEN TRIEU | Arjun Vir Singh   | Umar Farooq | Paolo Sironi | Chia Hock Lai 谢福来, CFtP | Tony Craddock | Dr. Martha Boeckenfeld | | Panagiotis Kriaris |Spiros Margaris | Dr Ritesh Jain   | Tamara McCleary  |Francesco Burelli | Ram Rastogi 🇮🇳 | Abhishant Pant  |Victor Yaromin | Sam Boboev | Nicolas Pinto 

40 years, 4 bank guarantees called. 3 were disasters: In my first one, our contractor's agent walked into a bank, cashed our pure on demand $1M tender bond, and disappeared forever. In the second one, the client refused to issue a payment certificate so the call on the guarantee failed. We had no document to trigger payment. In the 3rd one, we later learned that the bank was ready to pay but the client's lawyers browbeat them into refusing to pay. Created a "huge raft of issues" even though we'd met all guarantee conditions. In the last one, a payment guarantee we finally got lucky. I reissued our payment application just in time to trigger the guarantee before it expired and we actually got our money. Here's what I learned: Bank guarantee wording should be carefully checked by people experienced with them but often they're not. They're designed to be called, so check the conditions for calling carefully. When that agent stole $1M? We had to pay the bank back. No recourse, no insurance, just gone. When the client's lawyers intimidated the bank? This was all behind the scenes. Nothing we could do. The bank just got cold feet and refused payment. The pattern is clear: → Fraudulent calling happens (and you still pay) → Legal pressure works on banks → Conditional requirements can get blocked → Courts rarely help to stop a call on a guarantee unless it's obvious fraud In Australia you get 5 days notice before they call your guarantee. That's time to get a court injunction, but courts are very reluctant to block payments. Australia has unconditional undertaking so you don't have to give reasons why it's being called. After 40 years dealing with guarantees in one form or another, here's my advice: If someone insists on a bank guarantee, realise they're probably planning to call it. Look for alternatives - cash retention, parent company guarantees, escrow arrangements, short payment periods, etc. Because when they call your guarantee, you have to pay. Whether you feel you shouldnt or not. P.S. Worried about guarantee exposure on your next project? Want to explore safer security alternatives? Send me a DM and let's discuss protection that actually protects you.

The Three Different Approaches in Global Payments 1. Traditional Rails: Card Networks 🔹 Examples: Visa, Mastercard, American Express Traditional card networks are among the oldest forms of digital payments. These systems rely on multiple intermediaries to process transactions between customers and merchants: - A Customer using a credit or debit card to make a payment. - The transaction being routed through a Card Network (e.g., Visa, Mastercard) for authorization, clearing, and settlement. - The Merchant Acquirer processing the transaction and ensuring the merchant gets paid. - An Issuing Bank providing credit to the customer and paying the merchant’s bank. 2. Private, Closed-Loop Payment SystemsCommon in: China and other parts of Asia 🔹 Examples: WeChat Pay, Alipay Unlike traditional rails that rely on banks and card networks, closed-loop payment ecosystems are controlled by private companies that manage the entire transaction flow within their platforms. - WeChat Pay: Embedded within the WeChat app, allowing users to make payments for goods, services, and even peer-to-peer transactions. The platform integrates messaging, shopping, and financial services. - Alipay: Functions as a super app, offering payments, investments, insurance, and financing. It integrates with merchants and service providers to create a self-sustaining ecosystem. These systems leverage stored balances, QR codes, and digital wallets, enabling seamless, fast, and low-cost transactions. 3. Open Systems Based on Public Infrastructure Open-loop payment systems leverage public infrastructure to facilitate seamless transactions without reliance on private card networks or closed ecosystems. 🔹 India - UPI UPI is one of the most advanced and widely used real-time payment systems globally. It allows instant bank-to-bank transactions via mobile apps, linking multiple bank accounts with a single identifier. - A payer enters the amount and initiates a transaction. - UPI facilitates authentication and authorization between the Remitter Bank and Beneficiary Bank. - The transaction is completed in real-time with status updates to all parties. 🔹 Brazil - PIX PIX is Brazil’s real-time payment system that allows instant transactions 24/7. It integrates different financial institutions, allowing users to send money using simple identifiers. - Payments are processed instantly between transaction account providers. - A special settlement agent ensures fund movement within the system. - Unlike credit cards, PIX transactions are low-cost and widely adopted. 🔹 Europe & US - SEPA & ACS SEPA and ACH are electronic payment systems for seamless bank-to-bank transfers. - SEPA enables cross-border Euro payments between European banks. - ACH and ACS facilitate low-cost domestic transfers in the US. 👉 Subscribe for more insights https://lnkd.in/d94JgWBU Image source Varanium - Content: Personal Analyses #fintech #payments #cardpayments

🚀 How MSMEs Can Access Interest-Free Loans Using LC & BG 🌟 In today’s competitive environment, managing cash flow and reducing financing costs is crucial for MSMEs. Did you know that Letters of Credit (LC) and Bank Guarantees (BG) can act as powerful tools to access interest-free loans? Here’s how: 🔹 What Are LC & BG? LC (Letter of Credit): Ensures that your supplier gets paid on time while giving you a credit period to repay the bank. BG (Bank Guarantee): Provides assurance to your supplier or buyer, enabling you to defer payments or access supplies without upfront cash. 🔹 How It Helps MSMEs: 1️⃣ Interest-Free Trade Finance with LC: ->>Use LC to procure raw materials without immediate payment. ->> Defer payments to suppliers while generating revenue from sales. 2️⃣ Collateral-Free Advances with BG: ->> Use BG to assure suppliers or contractors of payment, enabling better credit terms. ->> Reduce reliance on costly working capital loans. 3️⃣ Enhanced Negotiation Power: ->> Build trust with suppliers and buyers. ->> Negotiate better payment terms and even discounts. 🔹 Key Benefits: ✅ Save on Interest Costs: Pay only minimal bank charges/commission instead of high loan interest. In general annual bank comission is in the range of 1%-2% instead of interest cost loans starting from 9%. ✅ Boost Cash Flow: Use your capital more efficiently. ✅ Expand Global Trade: LCs are widely accepted in international markets. ✅ Increase Credibility: Build trust and reputation with financial institutions and partners. 💡 Example Use Case: An auto parts MSME needing steel worth ₹50 lakhs can open an LC with a 90-day credit period. This allows them to manufacture and sell products, generate revenue, and repay the LC without needing an interest-bearing loan. 🌟 By leveraging LC and BG, MSMEs can effectively manage working capital and fuel business growth without the burden of high-interest loans. 📌 If you're an MSME entrepreneur looking to optimize your financial strategies, let’s connect and discuss how these tools can work for you! #MSME #Finance #InterestFreeLoans #CashFlowManagement #LC #BG #SmallBusiness #Entrepreneurship Findestination

⚠️ Exporting to the US? The Uyghur Forced Labor Prevention Act (UFLPA) could stop your goods at the border. The law mandates that importers prove—clearly and convincingly—that no part of their supply chain involves forced labor, especially linked to Xinjiang. For Asia-based manufacturers, that means demonstrating traceability all the way down to raw materials. 📦 This is happening at a time when trade routes are shifting, tariff rules are tightening, and supply chains are already under pressure. UFLPA adds another layer of operational complexity—especially for suppliers selling into US markets. Here are six tech-enabled practices that can support compliance: 🌐 End-to-end supply chain mapping – with SCRM software and multi-tier tools for visibility 🧾 Automated supplier screening – using compliance platforms and denied party lists 📑 Digital tracing & documentation – centralized records to support CBP response 📡 Real-time monitoring & analytics – powered by AI to detect and flag risks early 🛠️ Due diligence & remediation integration – verifiable action through third-party platforms 🔄 Regular updates & adaptability – via cloud-based tools aligned with evolving regulations It's also important to note that technology simplifies the process (and these processes are only going to get more complex)—but it’s only as strong as the due diligence program behind it. #UFLPA #AsiaExports #CBPCompliance #TradeComplexity #ForcedLabor #SupplyChainRisk #AICompliance #DigitalDueDiligence #EthicalSourcing

In international logistics you will experience incoterms on a daily, if not hourly basis. The two of the most popular Incoterms I experience are DAP, delivered at place and EXW, ex-works - basically opposite ends of the spectrum. Each have their own advantages and disadvantages - lets compare the two: DAP (Delivered at Place) 👍 Advantages: • Seller Responsibility: The seller takes on all costs and risks associated with transporting the goods to the agreed destination. • Convenience for Buyer: The buyer doesn't have to worry about the logistics of transporting the goods to their location. • Reduced Risk for Buyer: Since the seller assumes the majority of the transport risk, the buyer is protected from potential issues during transit. • Simplified Import Process: The seller handles export formalities, making the process simpler for the buyer, who only needs to manage import customs clearance. 👎 Disadvantages: • Higher Cost for Seller: The seller bears all transportation costs, which may reduce their profit margin. • Less Control for Buyer: The buyer has limited control over the transport process and carriers used. • Potential for Disputes: If there are delays or issues in transit, disputes might arise over who is responsible for specific costs and risks. EXW (Ex Works) 👍 Advantages: • Lower Cost for Seller: The seller only has to make the goods available at their premises, minimising their transportation costs. • Greater Control for Buyer: The buyer has full control over the logistics and can choose their preferred carriers and routes. • Transparency in Costs: The buyer can see and manage all costs associated with transportation, potentially finding cost-saving opportunities. 👎 Disadvantages: • Increased Responsibility for Buyer: The buyer is responsible for all risks and costs from the seller’s premises to the final destination. • Complex Logistics for Buyer: The buyer must handle all logistics, which can be complex and require expertise. • Customs Formalities: The buyer is responsible for both export and import customs clearance, which can be cumbersome and requires detailed knowledge of regulations in both countries. Summary ✔ DAP: Best for buyers looking for a hassle-free delivery with minimal involvement in logistics, but may cost more. ✔ EXW: Suitable for buyers with logistical expertise looking to control transportation costs, but places more responsibility and risk on the buyer. Anything I've missed? Do you have a preference as a buyer or seller? Let me know in the comments below 👇 #logistics #incoterms #incoterms2020 #shipping #delivery #supplychain

Let's discuss about Incoterms today: Incoterms, or (International Commercial Terms), are a set of standardized rules used in global trade to make it clear who is responsible for what when it comes to shipping goods between buyers and sellers. They cover things like who pays for transportation, who handles customs duties, and who takes on the risk if something happens to the goods in transit. Essentially, they help avoid confusion by specifying when and where responsibility shifts from the seller to the buyer. There are 11 different Incoterms, and each one outlines specific responsibilities. They fall into two main categories: terms that can be used for any type of transport, and those specifically for sea and inland waterway transport. Here’s a breakdown: For Any Mode of Transport: 1- EXW (Ex Works): The seller makes the goods available at their premises, and the buyer takes on all costs and risks from that point. 2- FCA (Free Carrier): The seller delivers the goods to a carrier nominated by the buyer, and the buyer assumes risk and costs after that. 3- CPT (Carriage Paid To): The seller covers transport costs to the destination, but the buyer assumes risk once the goods are handed over to the first carrier. 4- CIP (Carriage and Insurance Paid To): The seller covers transport and insurance costs to the destination, but the buyer assumes risk when the goods are with the first carrier. 5- DAP (Delivered at Place): The seller delivers to the buyer’s destination but does not cover unloading. The buyer handles unloading and assumes all risk once the goods arrive. 6- DPU (Delivered at Place Unloaded): The seller delivers and unloads the goods at the buyer’s destination. The buyer takes over responsibility once the goods are unloaded. 7- DDP (Delivered Duty Paid): The seller covers all costs, including duties, to deliver the goods to the buyer’s location. The buyer takes responsibility after delivery. For Sea and Inland Waterway Transport: 1- FAS (Free Alongside Ship): The seller delivers the goods alongside the ship at the port of shipment. The buyer assumes risk from that point, including loading. 2- FOB (Free on Board): The seller loads the goods onto the ship at the named port. Risk transfers to the buyer once the goods are onboard. 3- CFR (Cost and Freight): The seller pays for transportation to the destination port, but the buyer takes responsibility for the goods once they’re on the ship. 4- CIF (Cost, Insurance, and Freight): Similar to CFR, but the seller also covers insurance until the goods reach the destination port. Risk transfers to the buyer once goods are on the ship. Incoterms help clarify the division of costs, risks, and responsibilities between buyers and sellers, ensuring smooth international trade transactions.

What are Incoterms in the Trading Business? Incoterms, short for International Commercial Terms, are globally recognized rules published by the International Chamber of Commerce (ICC). They define the responsibilities of buyers and sellers in international trade regarding the delivery of goods, transportation costs, insurance, and customs clearance. These terms help prevent confusion and disputes in cross-border transactions by clearly stating who is responsible for what during the shipping process. --- List of Incoterms and Their Detailed Descriptions (2020 Version) Here are the most commonly used Incoterms, grouped by two categories: for any mode of transport and for sea/inland waterway transport. --- Incoterms for Any Mode of Transport: 1. EXW (Ex Works) Seller's Responsibility Ends: At their premises (factory/warehouse). Buyer Handles: All transport, export/import duties, and risks. Use Case: When buyer arranges full transport. Best for: Experienced buyers. 2. FCA (Free Carrier) Seller Delivers: Goods to a carrier at an agreed place. Buyer Takes Over: From that point. Used in: Containerized shipments. Flexible: Works for any transport mode. 3. CPT (Carriage Paid To) Seller Pays: Transport to the destination. Risk Transfers: When goods are handed to the carrier. Buyer Handles: Insurance (unless using CIP). 4. CIP (Carriage and Insurance Paid To) Same as CPT, but: Seller Pays: For insurance coverage during transit. Buyer Gets: More protection. 5. DAP (Delivered at Place) Seller Delivers: Goods ready for unloading at the destination. Buyer Pays: Import duties/taxes. No unloading responsibility for the seller. 6. DPU (Delivered at Place Unloaded) Seller Delivers: And unloads goods at named place. Buyer Pays: Duties/taxes after unloading. 7. DDP (Delivered Duty Paid) Seller Bears All Costs and Risks until goods reach the buyer’s premises, including: Transportation Insurance Customs duty and taxes Best for: Sellers who want full control. --- Incoterms for Sea and Inland Waterway Transport: 8. FAS (Free Alongside Ship) Seller Delivers: Goods next to the vessel. Buyer Loads & Handles: Export and transport beyond. 9. FOB (Free On Board) Seller Loads: Goods onto the ship. Buyer Takes Over: Once loaded. Used For: Bulk cargo or sea freight. 10. CFR (Cost and Freight) Seller Pays: For cost and freight to port. Risk Transfers: At loading onto ship. No insurance included. 11. CIF (Cost, Insurance and Freight) Same as CFR, plus: Seller Pays: For minimum insurance. Ideal for: Less experienced buyers. --- Why Incoterms Matter Clarify who handles shipping and insurance. Avoid misunderstandings and legal issues. Help determine accurate pricing. Simplify logistics planning. --- Tip: Always mention the Incoterm clearly on the invoice and contract with the named location (e.g., FOB Mumbai Port, India). ---

Understanding INCOTERMS in Logistics in Simple Terms. INCOTERMS.(International Commercial Terms) are international rules that define who is responsible for shipping, insurance, and risks when buying and selling goods across borders. They help buyers and sellers clearly understand their duties, making global trade smoother and avoiding confusion about who handles what during the delivery process. Key Incoterms used in Logistics 1.EXW (Ex Works) Seller: Provides goods at their location. Buyer: Handles all transport, duties, and risks from the seller's premises. 2.FCA (Free Carrier) Seller: Delivers goods to a carrier chosen by the buyer. Buyer: Takes responsibility after the goods are handed to the carrier. 3.FAS (Free Alongside Ship) Seller: Gets the goods to the dock, next to the ship. Buyer: Takes care of everything from loading onto the ship to final delivery. 4.FOB (Free on Board) Seller: Responsible until goods are loaded onto the ship. Buyer: Takes over once the goods are on board, covering risks and costs. 5.CFR (Cost and Freight) Seller: Pays freight to the destination port but not insurance. Buyer: Takes responsibility once goods are on the ship. 6.CIF (Cost, Insurance, and Freight) Seller: Pays for goods, freight, and insurance to the destination port. Buyer: Handles duties and transport after the goods arrive. 7.CPT (Carriage Paid To) Seller: Covers transportation to a specified location. Buyer: Takes responsibility after goods are handed to the carrier. 8.CIP (Carriage and Insurance Paid To) Seller: Pays for transport and insurance. Buyer: Responsible once the goods are with the carrier, handling further duties and costs. 9.DPU (Delivered at Place Unloaded) Seller: Delivers and unloads the goods at the agreed location. Buyer: Takes over after the goods are unloaded and handles any customs and local transport. 10.DAP (Delivered at Place) Seller: Delivers goods to the buyer’s location, excluding unloading. Buyer: Takes care of import duties and taxes 11.DDP (Delivered Duty Paid) Seller: Responsible for everything, including import duties, until goods reach the buyer. Buyer: Just receives the goods. #LOGISTICS #incoterms #shipping #freightforwarding