Trade Solutions

trade finance
If you have any questions regarding Trade Finance Services, Working Capital Solutions or Export Credit Agencies, please contact us.  
 
We offer a range of instruments that will secure your payments against unknown elements, such as political and commercial risk.

Use our extensive network of international correspondent banks and significant capacity to cover your international risk. We are present in Oslo, Bergen, Stockholm, Gothenburg, Copenhagen, London, New York, Houston, Singapore and Mumbai.

Trade Finance Services

Letter of Credit

Letter of Credit is a contingent payment confirmation from a buyer's bank to a seller, guaranteeing that payment will take place after the seller has presented certain documents in a form exactly described in the letter of credit and in accordance with the deadlines/requirements stated.

The importer eliminates the risk of receiving incorrect goods. The exporter is ensured payment from buyer.
In addition, letters of credit are an excellent financing product.

Is used when:
  • There is a geographic distance between the parties
  • Buyer and seller needs financial back up, seller is not comfortable with buyers credit rating 
  • There is a political or commercial risk
Forms and documents:

Documentary Collection

Documentary collection can be used as an alternative to prepayment, and provide security for both importer and exporter. Immediately after shipment of the agreed goods, the seller will send the agreed documents through his or her bank for presentation to the buyer's bank for payment.

The buyer will only receive the documents, i.e. get access to goods, after the invoice value has been paid in cash or a bill of exchange has been accepted (a commitment to pay on a fixed future date).

The seller is in control over the goods until the importer has paid.
Is used when:
  • The exporter and the importer know each other
  • There is no doubt about the importer's willingness to accept and pay for the goods
  • There are stable political, economic and legal conditions in the importing country
  • The importing country complies with international payment standards and is not threatened by trade and currency restrictions
  • Selling goods that easily can be on-sold to other buyers
  • The importer wants to avoid prepayment

This can be used as an alternative to prepayment, safe for both importer and exporter.

 » Export Collection form (pdf)

Bank Guarantee, Standby Letter of Credit, Silent payment Guarantee

A bank guarantee is defined as a binding obligation in which the bank undertakes responsibility to make a payment to the beneficiary if the applicant fails to perform a contractual obligation. Guarantees are one of the many alternative choices in the broad variety of Trade Finance instruments and in contrast to a documentary credit or a letter of credit, which are considered a method of payment, a guarantee serves only as a security instrument for the involved parties. 

Our guarantees cover many different risk scenarios, the most common types are:
  • Tender guarantee: provides the beneficiary with financial remedy if the applicant does not fulfil tender conditions
  • Performance guarantee: protects the beneficiary from financial loss in the event that delivery is not made by the agreed date
  • Advance payment guarantees ensure repayment of received advanced payments in the event that the supplier fails to pay
  • Payment guarantees for invoices
  • Guarantees for lease agreements/tenancy guarantees
  • Loan guarantees for loans in another financial institution or between two contracting parties
  • Guarantees for customs and tax payments, required by law or regulations
  • License guarantees required by public authorities.

» Application form (pdf)
» Introduction to international guarantees (pdf)

Working Capital Solutions

Supplier Finance/Supply Chain Financing

Supply Chain Financing is a tool for managing liquidity and strengthening the balance sheet. It gives the supplier access to favorable financing facilities based on the strenght of the buyer's credit rating.
Benefits for the buyer are longer payment terms (as days of payable outstanding are extended) at no further cost, off-balance sheet finance and the achievement of an early settlement discount while still paying at the original invoice maturity.
Suppliers receive prompt payment, reduce their trade receivables and optimize the cash conversion cycle.
This solution also strengthens supplier relationships and improves the invoice process.

Receivable Purchase

DNB offers purchase of receivables, which unlocks trapped liquidity as it allows companies to receive early payment on their outstanding invoices. Managing cash flows by reducing days of sales outstanding will have a positive effect on liquidity, accelerate collection cycle and enable funds to be reinvested in new projects.

Leasing

Under leasing structures, DNB will typically purchase an asset from the client and enter into a leasing agreement with our client’s client. As such our client achieves an off-balance sheet effect from the sale of the asset.
Leasing can be applied to most types of movable assets and while operational leases are more common, financial leases can also be arranged. DNB can also do leasing of fixed assets, so-called "renting". In terms of geography, DNB does leasing mainly in Norway and Sweden and more broadly leasing solutions should fit into DNBs strategies regarding sectors and clients.

Export Credit Agencies (ECAs)

ECAs

Diversification of funding- and risk capacity is a key consideration for most of our clients, especially within the capital intensive industries.
National Export Credit Agencies (ECAs) are designed to support its country's export industry by offering financing solutions. ECA financing is relevant for any of our clients that import capital goods/services and thus representing for a large part of our LCI portfolio. Examples are a ship, rig or seafood farming constructions.
Certain ECAs (including the Nordics) have introduced products that can provide support to domestic investments which result in production of export of goods/ services. A wide range of combination and structures can be applied, aiming for a cost efficient and diversified source of capital benefitting our clients.

DNB’s role covers origination, structuring and arranging of financing solutions for our clients with optimal support from ECAs.



See also: Prices Trade Finance, Quick guide to Bill of exchange (pdf), Number sequences in L/C's (pdf), Control of L/C's and issuance of documents (pdf), Checklist for new L/C-transactions (pdf), Incoterms (pdf)

Read about Incoterms here

skyline » Read about Incoterms on DNB Treasury Community 

How to reduce the Working Capital of the company?

utsikt
» Read more on Treasury Community (in norwegian)