What is Trade Finance?

This generally relates to a transaction involving the importing of goods. Such transactions are not easy to finance as the seller requires either money in advance or letters of credit before releasing the goods. A letter of credit is in reality a guarantee provided by a Bank or similar institution which guarantee payment of the goods when they are delivered to the UK. There can be a delay between order and delivery which means there can be a lengthy time gap before the goods are available to sell in the UK.

There are a number of specialist finance companies who specilalise in providing this type of finance. In many cases the finance company will actually sell the goods to your customer. Trade Finance Companies tend to be more cautious than factoring companies as they are exposed to greater risks.

The following transactions can be financed by Trade Finance Companies

Purchase Finance -The Finance Company will purchase goods directly from your supplier either by Letters of Credit or Cash Against Documents

Payment Finance - A similar transaction to Purchase Finance but where the supplier does not require payment by Letter of Credit but does require a guarantee that they will be paid.

Export Finance - 100% funding of non UK sales, subject of course to credit worthiness of the customer. Credit Insurance would be required in most cases to support the transaction. 

The Next Step

If you think you require Trade Finance contact us we can assist in sourcing the right finance solution for your needs.