Hochschule Offenburg Export Finance: Structuring Transactions

This report provides a comprehensive overview of export finance, detailing the operations of an export finance department within a bank. It explores the department's role in assisting businesses with international trade, emphasizing the importance of financial assistance for both small and large enterprises. The report outlines the crucial steps involved in structuring export finance transactions, including client assessment, payment methods, risk mitigation, and financing tools. It also covers the time frame required for setting up export financing deals, from account establishment to plan execution. The report highlights the benefits of choosing the bank for German corporate transactions, such as long-term financing and cash-as-you-ship terms. Furthermore, it discusses the bank's competitive advantages, including global presence, certainty of payment, and risk mitigation strategies, alongside additional services like bid and performance bonds and export risk insurance. The report references several academic sources to support its findings and concludes with an invitation to partner with the bank for export financing.

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Introduction to export finance department
• This is a bank department that deals with any form
of financial help to businesses or other financial
institutions that ship their products to other
countries for sale (Kidwell, 2016). This department
comprises the export finance officers. It gives
financial assistance to the businesses to be able to
reach out to their clients globally. A business
whether small or big needs financial assistant that
can be able to simplify their transactions through
trade financing (Ehrhardt, 2016).

• Export financing will help the exporter get to win
tenders and contracts across the world. The export
finance deals always comes up with insurance and
this will get the client risks catered for.

• Export is normally considered a journey that is
long and it calls for a complete understanding of
all the market dynamics which is arrived through
assessment of Each of the target markets. This
can sometimes be not possible due to limited
availability of funds.
• Aforementioned, the client can get a relationship
with us by opening a bank account and within six
months we can be able to finance his market.

• To come up with the best strategy, several key
elements has to be considered which include
financing, commitment and focus on the
market.
• The other important thing is establishing a
lasting relationship with international clients

Crucial steps to be followed when arriving and closing a
transaction
• When deciding on whether to offer any form
of financial assistance to any of the client, the
financing bank is supposed to follow some
steps so that the risk can be minimal. This
means it must have done an intensive
research of the client in question. By following
these steps, it’s what produces a detailed
report on the plan of export financing. This is
done mostly by the export finance officer.

The crucial steps that can be followed to arrive in a transaction include the
below;
• The client must have been in operation with
the financing bank for at least 6 months
• Identification on the main method of payment
that will be used
• Identification of the risk mitigation ways
• Deciding the financing tools

• The financing must be well secured even with the
collateral assets
• An export LC must be provided for back up
• A pro forma invoice must be provided (Bhogal,2019).
• Export declaration form if only required

Tools that will help a client get a competitive advantage
• Having a protection against default in
payments
• Provision of long term credit facilities of more
than 180 days
• Establishment of pay as you ship terms

Time frame required for setting up the export financing deal
• The setting up of the export financing would
require a minimum of 6 months for the client
to have operated the account. This will involve
deposits and withdrawals within the financing
bank. For a dormant account, the approval
may not take place. However, the approval
may not place for an active account that
hasn’t been having any transaction.

Steps to be followed in export finance
• Do a summary of initial research that has been
done
• Detailed check of the German corporate
SWOT analysis
• Listing the main objective of the financing
bank

• Preparing of the export budget of the
financing bank (Corbo, 2019)
• Preparation of the detailed schedule to
implement the export financing
• Presentation of the export financing plan

• Approval of the export financing plan
(Macfarlane, 2018).
• Execution of the export financing plan

Time required in each of the above steps in
export finance
• The time required will be as per below
analysis in the table. This will be applicable if
the client has an active account for the last six
months with this bank (Sinclair, 2016). On the
contrary, if the client doesn’t hold any active
account with the bank, she will be required to
open an account and run it for the next six
months.

• This means that apart from the six months,
the below timeline is added. The below
timeline represents the time required for
export finance from the date of application by
the client.

• Step
• Do a summary of initial research that has been done
before
Timeline-3 weeks
• Detailed check of SWOT analysis
Timeline-4 weeks

• Listing the main objective of the financing
bank
Timeline-1 week
• Preparing of the export budget of the
financing bank
Timeline -2 weeks

• Preparation of the detailed schedule to
implement the export financing
Timeline-1 week
• Presentation of the export financing plan
Timeline-2 days

• Approval of the export financing plan
Timeline-2 days
• Execution of the export financing plan
Timeline-Immediately after approval-maximum
2 days

Time chart for above steps
STAGE 1 WEEK 2 WEEK 3 WEEK 4 WEEK 5 WEEK 6 WEEK
Do a summary of initial research
that has been done before
Detailed check of SWOT
analysis
Listing the main objective of the
financing bank
Preparing of the export budget
of the financing bank
Preparation of the detailed
schedule to implement the
export financing
Presentation of the export
financing plan to FB
Approval of the export financing
plan by FB
Execution of the export
financing plan

Why choose us to organize German corporate
transaction
• Long term financing that is in good match with
anticipated revenue/income
• Cash as you ship terms are applicable
• No holding of assets

• No interest rate risks during the repayment
period
• No administrative resources required in
collection of the payment

Our competitive advantage and strengths as compared to other
banks
• In your business journey, we would like to
inform you that we operate in more than 20
countries worldwide and we are willing to
partner with you. We ensure facilitation of
international business and other big
investments for inclusive economic
development. The benefits that you will
experience with your association with us in
export financing are as below; (Strange, 2017).

• Certainty is guaranteed for payment (Ávila,
2016).
• Reliable and safe transaction at all times
• Mitigation of risks experienced in the business
• Improved cash flow in the business (Liu, 2017).

• We offer bid and performance bonds that help
a client win the foreign projects that require
bond or performance bid bonds.
• We offer borrowing terms in relation to export
assets
• We do purchase financing for all interested
abroad clients

• We offer insurance to cover export risks. This
safeguards the business against the non payers and
other risks associated with economic or politics.
• Partnership with your bank to offer export financing
abroad unlike other banks that doesn’t offer this
arrangement.
• We also offer other products in line with export
financing like support in financing of infrastructure,
energy etc

References and sources of information
• Ávila, H., 2016. Concept of Legal Certainty. In Certainty
in Law (pp. 171-194). Springer, Cham.
• Corbo, V., 2019. Export-oriented development
strategies: The success of five newly industrializing
countries. Routledge.
• Bhogal, T. and Trivedi, A., 2019. Documents in Foreign
Trade. In International Trade Finance (pp. 131-141).
Palgrave Macmillan, Cham.
• Ehrhardt, M.C. and Brigham, E.F., 2016. Corporate
finance: A focused approach. Cengage learning.

• Kidwell, D.S., Blackwell, D.W., Sias, R.W. and Whidbee, D.A., 2016. Financial institutions, markets, and money.
John Wiley & Sons.
• Liu, J., Jin, F., Xie, Q. and Skitmore, M., 2017. Improving risk assessment in financial feasibility of international
engineering projects: A risk driver perspective. International Journal of Project Management, 35(2), pp.204-211.
• Macfarlane, L. and Mazzucato, M., 2018. State investment banks and patient finance: An international
comparison. UCL Institute for Innovation and Public Purpose Working Paper 2018, 1.
• Sinclair, P., 2016. Compound interest and its validity (or invalidity) in the bank-customer relationship: the state of
the art of british common low discussed by virtue of a comparative analysis. Law and economics yearly review.

• Strange, A.M., Dreher, A., Fuchs, A., Parks, B.
and Tierney, M.J., 2017. Tracking
underreported financial flows: China’s
development finance and the aid–conflict
nexus revisited. Journal of Conflict
Resolution, 61(5), pp.935-963.

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