The bank guarantee as a tool for risk management- What are the challenges currently faced by the Ukrainian enterprises?The first question:-
Delays in payments - the unavailability of loans - Disciplinary charges
key partners, and as a consequence, reduced confidence in the Ukrainian
companies, not just investors but also to key partners, both in Ukraine
and abroad.- How do these factors affect the trade relationship?Sales
of products and manufacturers and trading companies - a guarantee of
successful development, and during a crisis - it is a guarantee of
survival. In
a crisis, many suppliers are forced to reduce the credit period of
trade, or even move to a scheme of payment upon delivery or payment, to
avoid the risk of default. The most pressing issue is what to do to customers in this situation? Their working capital inherent in receivables, maturities, and slows down. For
example, today, reduced ability to pay the supermarket chain has led to
manufacturers and distributors of essential goods - food, household
chemicals, household products, etc. - To suspend its work with them, and old debts go to the supermarket category is questionable.- What's the solution?The increase in working capital. We ask ourselves, is not it? Suspension of existing projects, reducing costs, increasing profits, bank loans or expensive private loans .... Are these methods are feasible and appropriate in a crisis?The ideal solution for customers today - to convince the supplier that payment for goods you arrive. Practice
shows that the business relationship, the best proof of solvency is a
reliable guarantee of a third party - a financial institution.This warranty is a guarantee of the bank - a tool to ensure compliance with contractual obligations.- Tell me more about what a bank guarantee?The bank guarantee is a financial instrument by its very nature does not require the diversion of funds. Bank
payment guarantee issued on behalf of the purchaser, the supplier
guarantees the reimbursement of the bank the amount of payment for
products delivered under the contract in case of nonpayment by the
buyer. During
the period of validity of bank guarantee supplier ships products by
providing credit to the buyer necessary for trade sales and revenue,
which was subsequently calculated as a buyer for the goods delivered. In the event of failure to pay the supplier refers to the bank for compensation. The
degree of trust between the parties is growing - the buyer receives the
necessary delay in payment, the seller releases the goods, without fear
that the income is not received in time.In
international trade contractors are often the same problem: while the
seller is difficult to assess the creditworthiness of the buyer, the
buyer is not easy to assess the willingness to fulfill the obligations
the supplier, as well as his professional and financial opportunities.Thus,
the main task for both sides to find the means to fulfill its
contractual obligations, goals, and serves as a bank guarantee. Thus,
the guarantee is an ideal tool for managing and financing risk for the
buyer - as a financing tool for the seller - as a way to increase sales
by offering trade credit, with no risk of default.- Under what conditions can a bank guarantee?As an instrument of the bank guarantee has its value. However, the fee for the issuance of guarantees is incomparable with the Commission for the issuance of credit. In practice, the cost - it is 2-7% per annum. The cost of bank loans in mid-2008, at least 2.5-3 times higher. Today,
with the possibility of obtaining a bank loan is very limited and the
interest rates on loans increased by more than 2 times the cost of
production remains the same guarantees and depends on the financial
condition of the company, whose name guarantees the quality of support
provided by the company as collateral.- What is important to know when choosing a banking partner of the company on domestic and international payments?An important factor is the rating of the bank that issues a bank guarantee. For the manufacturer, especially for international companies, not every bank is a reliable guarantor. Thus,
a situation may arise where the seller will require that the guarantee
was confirmed by another bank, with high, as a rule - international,
rating. The sense of recognition of shared responsibility is the confirming bank to the issuing bank (buyer's bank). In other words - it is an additional guarantee for the provider to pay for goods shipped. The cost of bank confirmation increases the cost of warranty by about 3% per annum. Thus, the higher the rating of the bank guarantee, the less likely that the necessary proof of warranty.- What would you not recommend to consider when choosing a bank?When choosing a bank guarantor, contractors must pay attention to the following:- Bank Ratings - national and international (Fitch, Moody S '). This information can be obtained directly from the bank or the Internet;-
Belonging to an international banking group, which has the highest
rating, a reputation as history has proven the existence, stability
during the crisis. For
example, a bank may be small in Ukraine, but it belongs to the
illustrious group, provides a high reputation and significant financial
resources and stability;- The presence of the bank in other countries. As a rule, the larger the network of the bank, the more he is known in the world, and the more power, more features. Intercompany
pricing policies to reduce the cost to the customer banking products,
which allows the bank in a competitive market.
Source => rtpp.com.ua
Source => rtpp.com.ua