Core Trade
This instrument supports payment if the applicant fails to perform or pay, rather than serving as the primary payment mechanism for a shipment
Answer: Standby Letter of Credit (SBLC)
In a traditional SCF program, whose credit quality generally drives the financing rate available to participating suppliers?
Answer: The buyer’s credit
A company has $500MM of receivables concentrated among five large investment-grade customers and wants to selectively monetize those invoices. Which receivables solution is the natural starting point?
Answer: SORP
In a typical JPMC led Inventory Finance structure, who purchases and holds title to the inventory during the financed holding period?
Answer: A third-party inventory finance provider / intermediary
Waystar Royco is the family-controlled media empire at the center of this television drama.
Answer: Succession
Unlike a standby, this instrument is expected to be drawn in the ordinary course against complying shipping or commercial documents
Answer: Commercial / Documentary Letter of Credit
Which working-capital metric is SCF primarily designed to help a buyer improve when payment terms are extended?
Answer: DPO, or Days Payable Outstanding
A company consistently collects customers in 75 days and wants to turn those receivables into cash sooner. Which cash conversion cycle metric is the team trying to improve?
Answer: DSO, or Days Sales Outstanding
A company has strong DSO and DPO, but holds inventory for an average of 120 days. Which cash conversion cycle metric represents the clearest opportunity?
Answer: DIO, or Days Inventory Outstanding
Ted Lasso crosses the Atlantic to coach this fictional English football club.
Answer: AFC Richmond
This party adds its own independent payment undertaking to an issuing bank’s commercial letter of credit
Answer: Confirming Bank
In an SCF program, a supplier typically receives early payment only after the buyer has completed what critical step?
Answer: Approved the supplier’s invoice
A company has thousands of invoices spread across hundreds of customers and wants to finance a diversified pool rather than select individual obligors. Which type of solution is generally more appropriate?
Sales Finance / portfolio receivables financing
A client wants a third party to finance $100MM of specialized components that have little value to anyone other than the client. What risk should immediately be considered?
Answer: Obsolescence
The restaurant at the center of The Bear is located in this U.S. city.
Answer: Chicago
In a draft-discounting structure, this event converts the buyer from the party receiving a draft into the party obligated to pay it at maturity
Answer: Acceptance of the draft by the buyer
A buyer has a long tail of small suppliers currently receiving checks or ACH and wants to generate rebate economics on eligible payments. What payment solution might complement its SCF program?
Answer: Virtual Card
An otherwise attractive receivables portfolio includes material exposure to a below-investment-grade customer. The customer is covered by a highly rated insurer for eligible non-payment risk. What risk mitigant should the team evaluate?
Answer: Trade Credit Insurance
A third-party provider purchases inventory specifically for a client. What contractual feature can help mitigate the risk that the client later refuses to purchase that inventory?
Answer: A take-or-pay or firm purchase commitment
This physicist led Los Alamos during the Manhattan Project and became the title character of a 2023 Christopher Nolan film.
Answer: J. Robert Oppenheimer
A corporate wants financing tied to an identifiable trade cycle but does not want the bank purchasing its receivable. Which Core Trade funded solution is the natural starting point?
Answer: Trade Loan
A company has $3.65 billion of annual addressable supplier spend. Approximately how much does one additional day of DPO represent?
Answer: Approximately $10MM
A company generates $730MM of annual sales. Approximately how much cash does one day of DSO represent?
Answer: Approximately $2MM
A company has DIO of 120 days because it buys critical components six months before they are consumed. An inventory provider purchases the components and holds them for 60 days before selling them to the company. All else equal, approximately how many days of inventory funding has effectively shifted away from the company?
Answer: Approximately 60 days
In Friends, this coffee shop serves as the group’s regular hangout.
Answer: Central Perk