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KNOW VARIOUS METHODOLOGIES OF HOW FINANCIAL INSTITUTIONS AFFECT SME FINANCING SOLUTIONSPowered by Malaysia Home Loan
Acquire business equipment Renovation purposes Transportation Purchases Service(s) acquisition Raw material purchases Hiring Workforce Property purchase/rental Technology purchase Insurance
•Term Loan•Leasing•Industrial Hire Purchase•Overdraft•Revolving Credit•Factoring•Letter of Credit•Trust Receipts•Banker’s Acceptance•Bills of Exchange Purchased•Foreign Exchange Contracts•Export Credit Financing•Bills for Collection (Outward & Inward)•Bank Guarantee•Shipping Guarantee
Identify Financing Purpose(s)
OVERDRAFT FACILITY (OD)
To meet working capital needs
Flexibility in funds management
Day-to-day operations are financially satisfied.
Commitment fee charge – 1% of unutilized portion of funds.
Interest calculated on daily basis
REVOLVING CREDIT
To meet short term working capital needs
Lower financing costs Continuous availability of
funds Convenient form of short
term financing Loan granted for fixed
period Loan can be rolled over only
upon expiry
Factoring Short term financing of trade debts. Discounted trade invoices purchase. Provide cash advances for business purposes. Easily obtainable No collateral required Able to be competitive in terms of credit
(Prices)
Letter of Credit (LC) Import or local purchase of goods. Financial pay material/service provider subject to
T&C. Lower price of goods and longer payment terms. Can assure payment to the beneficiary. Documents presented examined by trade
financing specialists. Less communication with foreign supplier (if any)
Trust Receipts Extends credit facility on bills drawn under
bank’s own LC (see above) Accept delivery prior to payment on sight
(PoD) Enables prompt payment to the supplier. Take delivery (orders) without upfront
payment (PoD) Ease cashflow
Banker’s Acceptance (BA) Financing export, import or domestic trade
transactions. Bills for products are paid on a specific future
date. Provides better cash flow before proceeds. Provides two-way financing as BA financing is
applicable to sales and purchases.
TYPES OF BANK GUARANTEE
Bid Bond/Tender Performance Advance Payment Warranty of Maintenance Retention Security
*all end with Guarantee
USES OF A GUARANTEE
Favouring the third party in terms of performance (purchases, payments, delivery)
Private Debt Security for Corporates.
Benefits Portrays customer capability to perform
service/product/work. Obtain more favourable trade terms. Funds to be used to support working capital
requirements. Release of retention funds under contract. Customers can access funds for advance
payments.
Expedite the release of goods which arrives before original transport documents.
Facilitate production and/or contract deadlines.
Release the goods without production of original transport document.
Imported under LC and is to be earmarked against TR/BA facilities