Foreign Trade and the services of Banks

Foreign Trade and the services of Banks

Foreign Trade and the services of Banks.

Foreign Trade and the services of Banks

Foreign trade includes the actions of Market, Routines and Logistics.

In the Logistics group, in order for a foreign trade operation to take place, the participation of a wide range of actors, agents or stakeholders is usually required, acting directly in the operation. Among these most relevant actors are the banks.


Banks are present in almost 100% of foreign trade operations, presenting themselves as participants in the various phases of the business, from the simplest and most common ones such as a foreign exchange transfer, to the more complex ones such as the financial structuring of the operation and in operations involving large sums of money. Thus, we highlight, among others, the following banking products and services aimed at foreign trade operators:

  1. Exchange: Considering that operations are carried out almost entirely in foreign currencies, the exchange rate becomes mandatory for those who intend to enter export earnings in the country. It is also a compulsory operation for those who intend to acquire foreign currencies for payment of its overseas obligations.
  1. Financing of production: exporters who need capital to produce the goods to be exported have in the banks their largest source of funds for this purpose, that is, the production of the goods, therefore, financing in the pre-shipment stage. In Brazil, an example of this is the Advance on Foreign Exchange Contract (ACC), an accessory of the export exchange operation.
  1. Financing for commercialization: resources intended to finance the post-shipment phase. In Brazil, an example of this is the Advancement on Deposits (ACE), also an accessory of the export exchange operation. Banks also participate in import financing, especially with the use of credit lines obtained from bankers abroad.
  1. Guarantees: when buyers can not obtain credit from their suppliers, a way to make the business viable is to offer the supplier the protection of a guarantee or bank guarantee to ensure payment of the transaction. Such warranty instruments may also be used to provide protection to the buyer who anticipates a payment and wishes to ensure the return of the money in case of non-shipment. Or, simply, you want to ensure the receipt of an indemnity in case of non-performance of a contract for the supply of goods or services.
  1. Documentary Credit/Letter of Credit: payment instrument used in foreign trade. It is a bank payment commitment and aims to ensure payment of the operation to the exporter (Beneficiary).
  1. Collection: specialized service of banks carried out through their correspondents, available for the collection of commercial and financial operations.
  1. Clearing: another important function is the “international clearing”, the world banking structure necessary for the circulation of foreign exchange between countries. Due to this structure, financial transactions, remittances and other operations are carried out in addition to commercial operations.
  1. Other banking products and services: various other services and products may be provided by the local banking network or abroad, depending on the characteristics of the operation.


Foreign Trade and the services of Banks

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Source: Based on text by Angelo Lunardi


2 Responses to “Foreign Trade and the services of Banks

  • This looks like a good rundown of the foreign trade services that banks provide and the general fact that there are typically several actors involved in a single transaction. To this point, I wonder what value banks offer by providing these services. Are they necessary in other words? Is there a better option? Maybe it’s that banks take over even more of the responsibility for these transactions?

  • Dear Ana,
    I think banks need to modernize more, adjust to the digital world, reduce costs and make services faster.
    Certainly soon the money transfer banking service will be disrupted, making foreign trade more agile.
    Thanks for following our blog.
    Alfredo Kleper Lavor

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