Structured Trade Finance – What Does It Mean?

Structured trade finance (STF), a type of debt finance, is used as an alternative to conventional lending. This form of finance is utilized regularly in developing countries, as well as, in relation to cross border transactions. The objective is to encourage trade by making use of non-standard security. STF is generally used in high-value transactions in bilateral trading relationships. As a more complicated type of finance, STF is commonly related to commodity trading.

Within the commodity sector, STF products are most prevalent. It is used by producers, processors, traders, as well as, end-users. These financial arrangements are tailored by banking organizations to meet the precise needs of the clients. STF products are primarily working capital financing, warehouse financing and pre-export financing. There are also some institutions that extend reserve-based lending, as well as, finance the conversion of raw materials into products, along with other customized finance products. In order to promote trading activities, STF products are extended across the supply chain.

STF structures are sponsored by limited recourse trade finance lines. The structure aims at offering better security mechanism and to act as an enhancement on the position of the borrower when viewed in isolation.

How Has Technological Advancements Complemented STF?

Trade credit insurance, bank assurances, letters of credit, factoring and forfeiting are some of the STF products that have been positively affected by the latest technological advancements. These products have changed due to the recent developments. The massive progress in communication and information domains have also helped the banking institutions to track the physical risks and events in the supply chain between the exporter and the importer.

Why are STF Facilities Used?

Structured trade finance products are used so that the risks related to trading in specific country and different jurisdictions can be mitigated. Any transaction together with STF products help to add resilience to the trade and the same cannot be said when looking at financing the individual elements of a trade. Moreover, it allows for lengthening the payment time, strategizing procurement, diversifying funding and enhancing the ability for clients to boost the facility sizes.

What makes STF extremely attractive is that the borrower's strength in the transaction is not scrutinized as closely as compared to a vanilla loan. Here, the focus is more on the structure and the underlying cash flows. Another reason for STF's popularity is that the transactions are not reflected in the balance sheet of a company and the presence of this financing option has helped several importers to maintain flexible credit terms with exporters.

In recent years, structured trade finance products coupled with the recent advances in technology are considered as the fundamental reasons for the increasing volumes of international trade.

Source Article

Can My Personal Injury Claim End in a Structured Settlement?

When you are in the middle of a personal injury lawsuit, your mind is in constant motion with questions about all the possible outcomes of your case. Although you might have an experienced personal injury lawyer on your side who is fighting for your rights to compensation, it can be tough putting your mind at ease until the case is completely settled.

Many people are worried about their settlements, and wonder how they will receive their payment in the end. Questions like, "Will I get all my money at once?" and "Is it possible that my compensation will be awarded as a structured payment?" are all common concerns by most personal injury plaintiffs.

Structured Settlements

A structured settlement is an agreed periodic payment plan in which the recipient receives a set amount of money over a specified period of time; and they are a common result of a personal injury settlement. There are both advantages and disadvantages of structured payments, depending on your particular perspective.

The number one benefit of a structured settlement is that you usually receive more money overall. In a lump sum payment, the amount is usually negotiated lower. Another major benefit is personal financial management. When a large sum of money is paid out overtime, it is usually easier to manage your finances, pay bills, save money, and maintain a positive financial portfolio. It may be especially beneficial in terms of tax liabilities as well.

Additional Benefits:

  • Simpler Tax Planning
  • Possible Income Tax Advantages
  • Additional Annual Income
  • Broader Subsidy Opportunities
  • Budget Protection

One of the common downfalls to structure pay is limitation. For those consider themselves financially savvy, not receiving your full compensation can be a huge restriction since you cannot use the money to make any lucrative investments. In other cases, a personal injury victim has already paid all of their hospital bills, medical expenses, and other related expenses, out-of-pocket. They have also already incurred lost wages from work; so by not receiving a full payment can be frustrating since victims in this type of situation is simply trying to put the money back where it was before their accident.

The Outcome of a Structured Settlement

If you win your claim and an insurance company agrees to give you a structured settlement, you will not be given a paycheck right away. Instead, you will be paid a set amount over a set period of time. The terms of structured settlement agreements vary from case to case, and payment amounts and schedules can be set in many different ways. These payments generally begin as soon as all the paperwork is processed; However, this time period can vary, and sometimes can take up to one year to begin receiving payments.

Source Article