Tips for Working in Trade Finance
Trade finance is essentially the financing of importing and exporting services and goods. The recent economic downturn forced most financial institutes to pull back on their commercial lending, including trade financing. However, trade finance is making a comeback as there is an increase in the amount of interest from the customer base of emerging markets.
The best candidates for careers in trade finance will need to have a very strong understanding of how international trade works. This includes an understanding of all of the common issues that businesses face when they are operating globally. This includes the economic and political risks, cultural differences and currency issues. Foreign language skills are ideal and people considering a career in trade finance should obtain experience working in other countries or with a company that engages in international trades.
“Import-export is coming”. esel_nils_import-export-4319.jpg by eSeL.at, on Flickr. This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported License.
Trade Finance Products
Some of the products or vehicles that are used in trade finance include:
• Documentary Collections – a process where the seller instructs their bank to forward documents that are related to exportation of goods to the bank of the buyer, with a request to present the documents to the buyer for a payment, indicating the conditions that allow the documents to be released to the buyer
• Letters of Credit – the letter from the bank that guarantees the buyers payment will be made on time and for the correct amount
• Exim Bank-backed Transactions
• Banker’s Acceptances – a debt instrument for the short term that is guaranteed through a commercial bank
• International Treasury Management
• Transaction Services
Jobs in Trade Finance
Most entry level positions in trade finance are in the operations area of the business. This may include processing payments or international financial instruments or performing a credit analysis on an international bank.
The mid-level positions in trade finance include country risk managers, sales officers, structured trade originators and operations supervisors. Some of the higher level positions include team managers, division managers and country managers.
Most people will begin their trade finance career at entry level, with the opportunity to advance into a higher level position by working for importers or exporters or working directly in a foreign land or for the foreign banking system. People that have a background in sales or finance will often pursue careers in trade finance.
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Credit Portfolio Managers and Trade Analysts
Individuals that are considering a career in trade finance may want to consider positions as a credit portfolio manager or as a trade analyst and they may someday be lucky enough to get a job at a major global international finance company. As more and more companies are going global there is a need for trade specialists that understand all of the risks involved with these expansions.
Compensation and Transitioning to International Trade
Trade finance requires a person to specialize in a specific area and because of this the pay can be much higher than the pay for other commercial lending positions. For anyone working in the commercial trade industry, it is important to note that they would be advised to familiarize themselves with the many aspects of the international trade industry, before attempting the transition into one of these positions.
A commercial lender will need to learn about the different payment methods, cultures and risks in order to make the transition into an international trade finance position. There is a lot of competition in the financial industry, meaning that anyone who wants to work in the field of trade finance is going to have to be extremely competitive by educating themselves in every aspect of international trade.
