德阳市学术大会组委会办公室.ppt

ITCs Trade Finance for SMEs,Building capacities to improve access to finance,Tehran, Iran Financing of SMEs: Increasing SMEs Access to Finance in the Context of the Global Financial Crisis 29 November 2009 Division of Business and Institutional Support, ITC,ITC enables small business export success in developing countries by providing, with partners, sustainable and inclusive trade development solutions to the private sector, trade support institutions and policymakers.,ITCs Mission,Building capacities on three levels,Trade Finance for SMEs is part of a section whose objective is to create a conducive business environment for exporting SMEs,The Business Environment Section provides specialized products and services for the development of exporting SMEs along an integrated approach in three areas,Trade Law,Trade Finance for SMEs,Export Facilitation,Business Environment Section,SMEs constitute the majority of business enterprises, and they are vital for employment generation and poverty alleviation. Lack of Trade Finance is a major impediment to ITCs thrive towards export impact for good: “Financing is the number one constraint cited by SMEs in developing countries” (World Bank) ITCs Trade Finance for SMEs Programme aims at assisting exporting SMEs at all stages of their development, by enhancing access to affordable credit, building entrepreneurs financial management skills, and encouraging the development of financial instruments and mechanisms tailored to SME needs.,In most developing countries and transition economies Trade Finance is a major impediment to SME development,Impact of the Financial Crisis,The financial crisis has exacerbated SMEs difficulties to access finance It is urgent to develop and implement short term solutions specifically designed to restore confidence and dialogue between SMEs and Financial Institutions. To alleviate the impact of the crisis on SMEs, ITC has developed a strategy bringing short and medium term solutions,In response to the lack of trade finance for SMEs, ITC addresses four main challenges with a detailed and integrated response,Challenges,ITCs response,Certified Trade Advisors program Online financial management training self-checkers SME financial management certification,Competency as Collateral (LOANCOM) Progress monitoring and coaching of SMEs,Partnership with other financial organizations Long-term guarantee and credit lines SME competency building LoanCom,Benchmarks and best practices for all relevant stakeholders,Build capacities of SMEs to access trade finance and strengthen their financial soundness,Enhance Financial Institutions understanding of SME risk and their ability to evaluate needs and project proposals,Coordinate with other financial organizations to mobilize long-term credit and guarantee lines dedicated to exporting SMEs,Broaden the range of financial services tailored to SMEs,A. Building capacities of SMEs to access finance Setting up a network of national counsellors,Purpose Generate a multiplier effect in country, through a network of counsellors providing training & advisory services in financial management to SMEs prior, during and after the loan Implementation mechanism Identification of potential counsellors and training in financial management Certification in financial management of counsellors satisfactorily fulfilling the program Can be combined to ITCs Enterprise Competitiveness Program Sustainability Certified counsellors are linked to a national Trade Support Institution SMEs to pay a fee for their services,A. Building capacities of SMEs to access finance Training modules in financial management,Target audience SME Counsellors Purpose Support material used to train counselors in adopting sound financial management practices and developing bankable proposals Implementation mechanism Generic training set comprising seven modules developed by ITC Modules tailored to the specificities of the country and sector where the project takes place Training delivered face to face, followed by practical work Coaching throughout the training program,A. Building capacities of SMEs to access finance Training modules in financial management,Content of generic modules,1. How to estimate SME financial needs,Introduction to short-term and long-term finance Analysis of key components that determine a companys financial needs (fixed assets, working capital, marketing costs, financial cushion, committed cash outflows) Methods for estimating a companys financial need,How to estimate SMEs financial needs Alternative sources of finances for SMEs Payment mechanisms & risk mitigation in international trade,Developing bankable proposals Bookkeeping & Cash Flow management Analyzing financial statements Budgeting & Forecasting,A. Building capacities of SMEs to access finance Training modules in financial management,Content of generic modules (contd),2. Alternative sources of finance for SMEs,Presentation of most common sources of finance available for SMEs Discussion of advantages & drawbacks of each source Procedure to select the most appropriate source of finance,3. Payment mechanisms & risk mitigation in international trade,Main payment mechanisms in international trade, pros & cons and applicability How to select the best payment mechanism Key risk mitigation instruments in international trade,Role of bookkeeping and accounting for a company Best practices in bookkeeping Revision of bookkeeping process Practicing through exercises,A. Building capacities of SMEs to access finance Training modules in financial management,Content of generic modules (contd),4. Developing bankable proposals,Understanding financial institutions practices & requirements for a loan proposal What makes a proposal bankable Process to develop a bankable proposal Common formats of business plans,5. Bookkeeping,A. Building capacities of SMEs to access finance Training modules in financial management,Content of generic modules (contd),6. Analyzing financial statements,Role of financial statements (internal/ external) Revision of key financial statements: balance sheet, income statement, statement of cash flows Introduction to financial ratios,7. Budgeting & Forecasting,Importance of sound planning for business success Link between strategic planning and budgeting The budgeting process The master budget and its components Using data & information for effective financial control,A. Building capacities of SMEs to access finance Financial management self-checkers,8,Target users SME managers Purpose Self-tutorials to identify and address weaknesses in financial management (SME FinCheck) and in accessing finance (SME FinAccess) Understand and quantify the impact of different loan and amortization scenarios on cash flow (SME LoanCalc), in preparation to negotiations with bank. Implementation mechanism Three generic self-checkers developed by ITC Self-checkers tailored to the specificities of the target country and sector Available online/ offline through partner Trade Support Institution Possibility to switch from one pre-defined language to another Answers are confidential,A. Building capacities of SMEs to access finance Financial management self-checkers,Use of generic self-checkers,SME FinCheck,SME manager answers a set of questions aimed at testing his knowledge in business management and financial management Topics tested in financial management: knowledge of general concepts, ability to plan, execute and monitor the use of financial resources Once questions are submitted, the software generates a report on the SME managers performance Graphical representation of performance in business/ financial management Visual representation of performance in financial management broken down per sub-topic Substantive explanations generated and displayed for questions where the SME manager answered incorrectly,A. Building capacities of SMEs to access finance Financial management self-checkers,Use of generic self-checkers (contd),SME FinAccess,Same principle as SME FinCheck: questionnaire to be answered by the SME manager, with automatic generation of a detailed performance report with graphs and substantive explanations Topics evaluated related to steps surrounding access to finance Ability of SME manager to assess his real needs Ability to identify best instrument and source of finance Pre-requisites to preparing a loan request Quality of the loan request (in particular financial part) Submission of the loan request and negotiation with the bank,A. Building capacities of SMEs to access finance Financial management self-checkers,Use of generic self-checkers (contd),SME LoanCalc,The SME manager fills in the details of his (expected) loan, in particular amount, interest rate, maturity, amortization scenario The software returns different amortization cases and offers the SME manager the possibility to refine his analysis The SME manager has the possibility to export the amortization tables to excel and further rework data. Example: in excel, he can add fees in order to determine the total cash outflow generated by the loan during the periods considered,B. Help FIs mitigate risk in SME lending LoanCom,Target users Bank loan officers Purpose Online interactive decision support system for financial institutions involved in SME lending Innovative approach: analyzing non-financial parameters alongside traditional financial parameters to determine the real potential of SMEs aims at developing a new breed of bankers Implementation mechanism Tailored version of software developed in partnership with the partner financial institution Software can easily be integrated to FIs information system Software becomes property of the FI,Use of the decision support system,The loan officer fills in the financial and non-financial questions following his analysis of the project proposal and his interactions with the SME manager Based on his input, the software automatically generates a report analyzing the performance of the SME manager Visual representation of financial and non-financial performance Detailed analysis of the weaknesses of the SME/ project proposal A final recommendation on how to proceed with the loan request,B. Help FIs mitigate risk in SME lending LoanCom,B. Help FIs mitigate risk in SME lending Early warning & coaching system of loan recipients,Concept Partnership between Bank, Trade Support Institution and loan recipient to enable early detection of repayment problems, coupled with targeted coaching of the SME to address issues identified Beneficiaries The Bank: the probability of its loan being repaid is increased The TSI: fulfills its mission of assisting SMEs The SME: gets targeted assistance, reduces default risk and increases its creditworthiness Conditions for sustainability Committed partners Each party fully understanding reciprocal benefits Institutionalization of process,Concrete example: ITCs strategic Approach to Trade Finance for SMEs in Cambodia,C. Coordinating with other organizations to secure credit & guarantee lines for SMEs,D. Broaden range of financial services for SMEs Publications & Tools,Target users SME managers Counselors & Trade Support Institutions Policy-makers Purpose Better diffuse information on SME finance Raise awareness and share best practices on innovative trade finance schemes Implementation mechanism Key topics identified and scope determined Publication developed in close collaboration with experts in the field,D. Broaden range of financial services for SMEs Publications & Tools,Examples How to access finance a guide for exporting SMEs Islamic banking a guide for SMEs Finance for Trade Business Navigator on e-Finance for SME Exporters in Developing Countries Export Credit Insurance and Guarantee Schemes: A Practical Guide for Developing and Transition Economies Financing Service Exports Foreign Excha