When a financial institution provides a company with a credit facility it is provided by either a tangible or intangible forms. Following is the list of tangible forms of facilities:
Intangible facilities - also known by contingent facilities – are when the bank guarantees a certain obligation on behalf of its client by providing a letter of guarantees (bid bond, performance bond, retention bond, advanced payment guarantees and payment guarantee) and/or letter of credit (sight LC or deferred LC), and the bank does not provide any direct cash to its client but takes the risk of payment if the company fails to meet its obligation.
A Treasury is considered to be a fundamental part of any banking structure. The Treasury offers variety of solutions to minimize the business’s risks and sometimes improve their income such as hedging, fixed income, interest rates, exchange rates, and commodities.
Most financial institution provides tools and solutions to help companies improve their cash management which ultimately help companies to grow. For example:
Availment