Finance Guide: Trade FinancePublished on 20th April 2016 - Last update on 27th February 2018
Trade finance, also known as export finance or supply chain finance, is a way of funding a business’s cross-border expansion. Simply put, it is any variety of finance that allows a business to trade internationally.
When trading internationally, businesses often have difficulty obtaining the credit they need from their suppliers, greatly decreasing their working capital as they wait weeks or months to receive payment from their buyers. Trade finance can help solve this problem.
A lender providing trade finance is a partner for the whole supply chain, assisting with the funding gap between the supplier and the business in need of funding, as well as between the business and the buyer of its products. This makes it easier for the business to trade internationally without a large reserve of working capital. Trade finance lenders can provide both pre-shipment and post-shipment finance, as well as import finance for businesses that are importing internationally rather than exporting.
When assessing a business’s eligibility for trade finance, lenders will look at the credit history of the business’s supplier and buyer, and the business itself. Trade finance lenders are less interested in the business’s balance sheet than details of the specific transaction, so it’s well suited to businesses that have a strong supply chain and can prove the creditworthiness of their suppliers and buyers.
Making sure you have the right finance for your business is complex and can often be confusing.
There are so many options that can seem very similar, but which when reviewed closely can be very different in terms of monthly payments, overall costs, up-front fees and terms and conditions.
If you’d like to talk to one of our Business Finance Specialists:
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