Evaluate the Various Types and Range of Financing Facilities offered by Any Financial Institution That Specialized in International Trade Transactions

1. Evaluate the various types and range of financing facilities offered by any financial institution that specialized in international trade transactions.

     There are several types and range of financing facilities offered by any financial institution that specialized in international trade transaction. However, there are only two types financial facilities will be described in detail which are Overdraft facility and Term Loan facility. There are many different types of financial institution is now offering this facility, anyhow, I would like to take Hong Leong Bank as an example.

     The first financing facility is Overdraft facility. Overdraft facility (O/D) is a kind of credit agreement that is offered and granted by the financial institution which allows the account holder(customer) to withdraw or use his account up to an agreed amount. Which mean that they could use more or exceeds the amount that they had in their account, but not overreach the specified maximum negative balance. (Business Dictionary, 2018) By setting up an overdraft facility with a financial institution such as Hong Leong Bank, their customer could have benefits with short term cash flow issues. Overdraft is usually a short-term financing option for exporter, it allows and help the exporter to have extra credit in order to pay the purchase of raw materials, manufacturing or some other overhead expenses. Overdraft facility is allowed on a spotless premise ensured by outsiders or secured against guarantee. An interest is charged in all overdrawn and for the period of its use. In any case, a commitment cost is constrained on any unutilized bit of the work environment upheld.

There are several advantages and disadvantages for an Overdraft facility. The disadvantages are, Overdraft has a higher rate compare to the mortgage loans, banks could recall the Overdraft facility at any time or change the credit limit whenever they want, risk of seizing and so on. (LoanStreet, 2016) However, Hong Leong Bank has offered several beneficiations such as short-term financing facility, flexibility, no fixed repayment schedule and interest charged only on utilized amount to their customer who applied for the overdraft facility. (Hong Leong Bank, 2018) First of all, there is no fixed repayment schedule. An overdraft guarantees perfect instalments and avoiding starting late instalments punishments as instalments can be made paying little personality to whether there is nonappearance of agreeable adjust in the record. The second benefit is flexibility to utilize funds as and when required. Overdraft facility benefits their customer to draw on funds as when they are required. Plus, it gives client own choice of when to make reimbursements as there are no settled repayment plans foreseen that would hold rapidly to. The client chooses when to settle both the interest and fundamental entire remembering the true objective to work out a segment mastermind that works best for the themselves. The third advantage that the customer could have from Overdraft is interest charged only on utilized amount. Client might be charged eagerness on the amount that is used from the overdraft and not the total entirety overdraft control that are permitted by the financial institution. The last advantage is short-term financing facility.  The income from deals won't not be adequate for development financing needs for a small business, for example, assembling new creation limit, including new deals staff and opening new retail outlets. Organizations can plug money setbacks or pay for crisis subsidizing needs on the off chance that they approach working credit extensions and different types of here and now financing. It may be simpler for organizations, particularly private companies, to anchor here and now financing rather than long haul or value financing. Here and now financing costs are lower than long haul rates, which gives administration greater adaptability in working their business. (Basu, C. 2017)

Buyers may use the Overdraft facility to pay his imports when the required reports of credit arrive. Once the merchandise is sold, the returns will be utilized to settle the Overdraft. Overdraft facility is allowed on a spotless premise ensured by outsiders or anchored against security. Overdraft give an advance to an organization when the organization's money account is unfilled. The bank charges interest and expenses on the acquired cash. It cost not as much as advances, are immediately finished, and do exclude punishments for an early result.

2. Select two companies (an importer and an exporter) that has or will become a trade partner. Discuss the international trade arrangements between a company (real company) and a financial institution for a food or global agricultural company that export their product to another country. Show a diagram and applies two International Trade products offered by the financial intermediary to this company.

      For the import company, I would like to choose^ The company that I have chosen as the exporter is Asian Food Export. The company office and factory are both located in India. The financial institution that I would like to recommend for Asian Food Export is Standard Charted Bank. Asian food exports come from the origin of fresh, dehydrated Onions, garlic, other vegetables, seasonal spices and oilseeds, which are being grown and grown. The company has good connections with some global companies. Asian food exports to obtain the foothold in it to run all of the market, edging out a leading position in the competition and enjoy in most existing fresh, dehydrated Onions, garlic and other vegetables seasonal spices and oilseed categories and continue to spread its wings, every day in the growth in the global market. Asian food export company is a leading company, the main production and export of fresh, dehydrated Onions, garlic and other vegetables, and different forms of seasonal spices and oilseeds, unlike in India. The reason why Asian food export choose this area is because of their qualified team, dry atmosphere, the natural environment friendly agriculture technology, and after many years of experience in processing equipment of trained human resources, Asian Food Export select the best quality material suppliers. The company are 100% export-oriented, exporting fresh, dehydrated Onions, garlic, other vegetables, seasonal spices and oilseeds in 15 countries around the world. The company strives to provide the highest quality products and the greatest value for money. Over the past four years, working with local markets, Asia's food exports have now entered export markets, and the benefits have been enormous. In the rapidly expanding Agro product category, Asian food exports operate a vertical market consisting of selected product units in Agro products. (AsianFoodExport, 2017)