Trade Finance
Trade Finance, also known as import finance, provides funding for goods as they are transported from the seller to the buyer.
It provides you with the ability to pay your supplier for the purchase of finished goods (often from overseas).
Trade finance is usually offered with invoice finance as a way of bridging the gap between payment for imports and receipt of funds through subsequent sales but it can also be used on its own.
What are the benefits of trade finance?
Improved cash flow
Trade finance improves your cash flow by bridging the funding gap between paying your supplier and being paid by your customer. This means you can tender for new business and start work on new orders without delay as your cash won’t be tied up. It can help improve supplier relationships and possibly allow you to secure early settlement discounts.
Confidence to grow
Improved cash flow can demonstrate your liquidity to suppliers, encouraging them to do more business with you and also enables you to expand import levels with less financial risk.
Accessibility
Trade finance is ideal if your business does not have the financial track record or security to negotiate sufficient overdraft facilities or get credit from your suppliers. This accessibility is often vital for new or growing businesses.
Flexibility
This type of finance frees up existing lines of credit for other business purposes. When using trade finance facilities it’s often possible for you to repay bank facilities and release previously pledged security. Some trade finance providers are also prepared to provide finance against other assets, or even unsecured loans, as part of a packaged solution.
Management Time
Using trade and invoice finance facilities together frees up valuable management time as it takes over the paperwork involved in paying the supplier (including raising Letters of Credit) and provides a cost effective way of outsourcing your purchase ledger management.
