What are the trade financing businesses? The intrinsic nature of trade financing: closure and self-compensation.

Abstract: In recent years, trade financing has gradually become an important part of the banking business layout. This paper discusses the inherent nature of trade financing business, analyzes the differences between trade financing business and traditional loan business, and puts forward feasible operational suggestions for banks to control trade authenticity and operational risks.

Keywords: closed trade financing self-compensation

1. Concept analysis of trade financing

According to Article 244 of the Basel Accord, which is called the "Basic Law" of the banking industry, trade financing means that banks use structured short-term financing tools to finance assets such as inventories, prepayments and accounts receivable in commodity transactions. For this kind of financing, the borrower generally takes commodity sales income as the main source of repayment, and the core risk lies in the borrower's ability to arrange transactions and the bank's control ability.

The theoretical basis of trade financing is the commercial loan theory in 1960s, that is, real bill theory or automatic settlement theory. Banks provide short-term commercial loans suitable for commodity turnover, which is self-compensation, that is, with the completion of material turnover and production and sales, loans are naturally repaid from sales income. Accordingly, the self-compensating trade loan is based on real commercial behavior and is pledged by real commercial paper. Once the enterprise can't repay the loan, the bank can deal with the related goods according to the mortgaged bills.

At present, the traditional bank credit guarantee methods are mainly mortgage and guarantee, emphasizing the revitalization of fixed assets in social wealth; The current assets of a large number of enterprises, especially the inventory in the intermediate state, including the advance payment in the pre-inventory state and the accounts receivable in the post-inventory state, have not been well revitalized, which makes the current assets accumulated in the circulation link unable to be revitalized.

From the perspective of business cycle, the operation of any enterprise (except service-oriented enterprises) is a combination of logistics and capital flow. Enterprises spend money to buy goods; Resale the goods and recover the funds. Trade financing is to seek the combination of enterprise capital flow and logistics, relying on enterprise business activities to provide financing methods.

2. The inherent nature of trade financing: closure and self-compensation.

Closure and self-compensation are the inherent essence of trade financing. Self-compensation, that is, with the completion of material turnover and production and marketing process, the loan is naturally repaid from sales income, which is consistent with the cash flow generated by commodity sales income in amount and time, which is convenient for monitoring and management. Banks pay more attention to the value of goods used for financing, and whether the value of goods is sufficient or not determines whether the financing enterprise has a stable source of repayment. However, the closure requires that the capital flow in trade financing should be strictly earmarked, and the funds used for goods in the process of trade circulation have always been in a relatively closed capital closed circle, which is strictly different from the traditional credit system. Loans based on a certain kind of goods are absolutely not allowed to be used for other purposes. This closed, self-compensation process can effectively reduce risks. This closed operation, in which banks directly pay upstream and downstream enterprises according to the trade chain, can reduce the risk of customers defrauding funds from banks.

Trade financing, as its name implies, is the financing of trade. Therefore, trade is the premise and foundation, and trade is the carrier of financing. The internal essence of the closure and self-compensation of trade financing is based on two key characteristics of trade: the authenticity and continuity of trade. Based on the investigation of the authenticity of trade, the bank's credit rating of financing enterprises turned to emphasize the real background of single trade. Based on the continuity of trade, the bank's evaluation focuses on the credit status of the whole trade process and supply chain, which is based on a full investigation of the logistics, capital flow and information flow of the trade business itself. By investigating the credit records of enterprises, counterparties, customers' default costs, portfolio application of financial instruments, post-loan management, and bank operation procedures, it is determined that the sales income generated by enterprises in the course of trade constitutes the first repayment source of trade financing. In the design of credit scheme, based on the capital flow, logistics and information flow of enterprises, according to different trade stages, different settlement methods (letters of credit, collection or remittance), different trading opponents, different trade goods, different capital needs and other factors, combined with different trade financing products and tools of banks, more flexible financing methods and loan and repayment methods are provided and tailored. The financing amount is determined by deducting the proportion of self-owned funds from the single transaction volume; The financing period is mainly short-term financing that matches the trade cycle. Therefore, if the closure and self-compensation of trade financing are tightly buckled, the loan funds of trade financing will not be misappropriated, and the risk is relatively small, which is very suitable for the characteristics of weak business stability. According to the author's years of experience in international business and credit review, the differences between trade financing and general working capital loans are sorted into the following nine aspects (table 1):

3. Risk control of trade financing

3. 1 Grasp the authenticity of trade

We say that the risk of trade financing is low, and grasping the authenticity of trade becomes the first key. Because the bank's credit products, financing amount, financing period and risk control methods are all designed based on the trade links of enterprises. According to the author's experience, in practice, bank account managers and credit examiners should pay attention to: whether the commodity transactions engaged by enterprises are the main business of enterprises, and whether such transactions are areas that enterprises are good at and familiar with; The year and method of the upstream and downstream counterparties of the enterprise are verified by previous contracts and performance documents; View the enterprise statement; Check the enterprise customs declaration and tax payment certificate. Verify the import and export records of enterprises by inquiring about customs data and customs duty and value-added tax payment vouchers; Export tax rebate can verify the previous export records of enterprises; Verify whether the enterprise has a true export record through customs declaration, online verification and electronic customs declaration inquiry; In the aspect of enterprise import, goods can be controlled through the control of cargo rights documents such as ocean bill of lading; By sending bills from banks and circulating documents between banks, the authenticity of payment accounts and transactions is guaranteed; With the help of tax bureau (export tax refund record, customs duty and value-added tax payment certificate), customs (import and export data, customs declaration form and electronic customs clearance verification), foreign exchange administration (online verification, foreign exchange settlement and sale records), insurance policy (property insurance, export credit insurance credit investigation report, credit line approval form), quality inspection report (CIQ, SGS and other inspection institutions), and transportation agent (shipping, air transportation and freight forwarding company).

For example, Company A, an import and export enterprise, communicated with the account manager of the bank and said that its main business is to import bearings and export clothing, textiles and toys. Last year, the import volume was 20 million US dollars, and the export volume was100000 US dollars. In order to confirm the authenticity of the enterprise situation, the best way is to verify it through an authoritative third party. On the export side, banks can go to the tax bureau to investigate the export tax rebate records of enterprises and divide them by the tax rebate rate to calculate the export volume of enterprises. According to the enterprise's export goods declaration form, export foreign exchange verification form, special VAT invoice deduction form, export sales invoice and other documents, the enterprise's export tax rebate of 8.5 million RMB last year can be roughly deducted from the export tax rebate rate of clothing and textiles stipulated by the customs, which is about 60.72 million RMB, or about 9.34 million US dollars (the exchange rate is about 6.5), and the enterprise's import situation can also be confirmed. By checking the import declaration form, special payment book for import tariff and special payment book for import value-added tax, the import tariff paid by the enterprise last year was RMB 565,438+million, and the customs stipulated that the tariff rate of imported bearings was 4%, so it can be calculated that the import amount of the enterprise is about RMB127.5 million, about 196654.38. Therefore, the situation introduced by enterprise A is basically the same.