International Bonds, Guarantees, Documentary Collections

1. Introduction to International Bonds (overseas guarantee) and Guarantees
2. Tender and Performance Bonds
3. Advance/progress Payment Bond
4. Retentions and On-Demand Bonds (“Calamity Bonds” or “Suicide Guarantees”)
5. Other types of guarantees
6. Managing bonds and guarantees
7. Bank obligations
8. Customer liability records
9. The International Chamber of Commerce Rules for the Issuance of Bonds and Guarantees
10. Factoring and Forfeiting
    1. Reverse factoring (Confirming)
11. Invoice discounting
12. Endorsements
13. Bills of Exchange
14. Documentary Collections
15. Clean Collection. Managing collections
16. Influence of religion on financial systems

AI for Global Business

1. AI and Global Trade
2. AI in Global Strategy and Decision-Making
3. AI in Global Finance and Risk Management

Factoring and Forfeiting

In this part, we will explore the export finance products that are growing rapidly. We will explore Factoring, Invoice Discounting, and work through the procedure for a Forfeiting transaction.

In this part, student will:

1. Become familiar with the fundamentals of Factoring
2. Learn what benefits the factoring offers to a growing business
3. Study the fundamentals of Forfeiting
4. Discuss the differences and similarities between Factoring and Forfeiting
5. What Invoice Discounting is and how it compares to Factoring

Objective: to gain a good understanding of Forfeiting, Factoring, and Invoice Discounting.

Documentary collections

The objective of this part is to understand what Documentary collections are and how they work. Export and import Collections will be analyzed.

In this part, student will:

1. Learn that Documentary collections are a service provided by the Bank whereby the Bank facilitates the settlement of the payment between importers and exporters by a collection of financial and commercial documents
2. Discover that Collections offer a greater degree of security to the exporter than open account transactions
3. Understand the operation of:
   1. Export Collections
   2. Import Collections

The main objective of the Subject “International Bonds and Guarantees” is to learn about the different types of bonds and guarantees and how they operate. In this Subject, student will:

1. Learn what types of bonds and guarantees there are and how they operate
2. Analyze the advantages and disadvantages of the different types of bonds/guarantees for exporters
3. Discuss the involved parties and their responsibilities
4. Examine how the banks manage bonds/guarantees
5. Gain a good understanding of Forfeiting, Factoring, and Invoice Discounting

The Subject “International Bonds and Guarantees” is included within the curriculum of the following academic programs at EENI Global Business School:

Course: Payment Methods.

Masters: International Business, Foreign Trade and Marketing.

Doctorate: Global Trade.

Postgraduate Certificate in International Trade.

Languages: or Financement Financiación Financiamento.

International Trade Finance - FOREX.

International Bonds and Guarantees.

The outcome of a successful tender is the award of a contract and some cases, the eventual submission of a performance bond or guarantee.

The conditions of a performance bond or guarantee are sometimes stipulated in a letter of credit opened by an importer in favor for the exporter. In such cases, the letter of credit (LC) does not become operative until the performance guarantee is established in favor to the importer.

An on-demand bond (“Calamity Bonds” or “Suicide Guarantees”) is where the Bank is providing the bond has an obligation to pay upon first demand, if such demand is made literally by the terms of the bond. Many importers (particularly in the middle east) will only accept this type of on-demand bond or “demand guarantee.”

The International Chamber of Commerce first published the Uniform Rules for Contract Guarantees (ICC Publication No. 325) in 1978. The rules are intended to regulate guarantees and cover tender bonds, performance guarantees and repayment guarantees given by banks, insurance enterprises and other guarantors.

Unlike the UCP 600 for Documentary Credits, the Guarantee Rules of the International Chamber of Commerce are not broadly used in Central Asia or other parts of the World.

Collections are a service provided by banks to their export and import customers with the objective of payment collection under the structure and security of an internationally accepted body of rules known as URC 522 of the International Chamber of Commerce, Paris, France.

Using the collections, the banks facilitate the settlement of payment between the importers and exporters. Collections offer a greater degree of security to the exporter than open account transactions.