But can you afford to take a chance that a new customer will pay – and will pay promptly?
Trade finance could provide the solution, by ensuring that you will receive the funds you need - whether you are dealing with UK or overseas businesses.
Trade finance covers a range of solutions to bridge the cash flow gap between paying suppliers and receiving payment from customers. Instead of needing you to fund your sale - which can mean a serious drain on your working capital - trade finance will pay your suppliers for the goods you buy until you make the sale.
Looking to grow your business overseas but reduce your risk?
Find out if trade finance will benefit your business today
If you need to fund sales yourself, you can often be faced with an order that is simply too large for your business to fund. Trade Finance can provide all the funds you need, whatever the size of your commitment. You can have the funds you need to complete the deal and pay local and overseas suppliers. You simply pay back the lender when your sale is completed.
If you have a single, large deal to finance, or multiple smaller arrangements to fund, trade finance can help. It can provide working capital to support your entire trade cycle, from initial order to customer payment, enabling your business, not just to fulfil existing orders, but to forge new relationships with customers and suppliers around the world.
What is trade finance?
The definition of trade finance, in its simplest terms, is the movement of assets and any other transactions overseas into other markets. To ensure the safety of purchasers and the seller of trade finance, lenders will often provide a needed service to make the transactions as meaningful and as safe as possible.
How does trade finance work?
Often businesses wish to buy goods from suppliers for resale but don’t have sufficient working capital or supplier credit terms to do so. Trade finance allows businesses to buy, receive and sell goods before payment is made.
Once you have a trade finance arrangement in place, it can provide the funds you need, based on your orders and contracts.
It helps by guaranteeing payment to suppliers before goods are in transit and making payment when items are dispatched. It is particularly important if you are doing business overseas when long transport times can mean costly delays in delivery and in receiving payments.
Suppliers can be paid on the same day goods are shipped, and funding is available until you receive end-customer payment.
What are the different types of trade loans?
Letters of credit: The importer's bank promises the person exporting the goods that they will make payment once the transaction has been completed.
Bank guarantee: This is where the bank will act as a guarantor if the importer or exporter fails to adhere to the terms and conditions of the contract. The bank will pay a sum of money to the beneficiary.
Factoring: This is where the exporter will sell their invoices to trade financers at a discounted rate. The factor will then sell it to the importer, who will pay the product's total price.
Forfaiting: This is where the exporter will sell all of their accounts to a forfaiter at a discounted rate in exchange for cash.
Insurance: This is used for shipping and the delivery of goods.
Lending: Lending lines of credit can be issued by banks or other providers to help importers and exporters.
Export credit: This is supplied to exporters as a form of working capital.
Trade finance helps avoid payment risk
Trade Finance can even be arranged to transfer the risks of delayed, or disputed payments, or even non-payments from you and your business to the lender.
It means you can afford to take a risk with a new supplier or customer. It means you can grow your business, and develop relationships with suppliers due to payment guarantees. It can also help you negotiate early payment discounts with suppliers.
Thinking of getting into the trade finance industry? Speak to Rangewell - we find trade solutions to suit your needs.
What are the advantages of trade loans?
Here are just some advantages of trade financing:
Trade financing will give your business the breathing room that is needed to grow when the opportunity arises. Payments can be made to the supplier, and repayment can also be tailored to the borrowers' needs.
Unlike a traditional bank or business loan, there is very little documentation required with trade financing. As a result, contracts are clear cut and straightforward, and you won't have surprise fees at the end of the transaction.
Rangewell has years of experience when it comes to connecting domestic and international businesses, and we can give you all the information you need.
Funds will become available almost immediately, which means this will improve your transaction flow. You'll be able to keep inventory and stocks without having to pay hefty amounts upfront.
To learn more about international trade finance and trade finance transactions, speak to Rangewell today!
What are the disadvantages of getting a trade loan?
There are some trade finance disadvantages that you should be aware of.
Trade credit seems to be the perfect option for startups, but it can be significantly more challenging for new businesses to obtain. In addition, some suppliers may be reluctant to offer trade credit until your business has built up a trading history and has become more established.
While trade credit is essentially 'free' money and can be repaid without interest, missing repayment deadlines can turn into expensive debt. Therefore, most terms and conditions will include penalties for later payments.
If you fall behind on credit payments, you and your business could face legal action. In addition, goods and assets can be seized to pay outstanding bills.
Making prompt repayments of credit is good for your business' credit rating, but missing payment deadlines can harm your credit rating.
Get in touch with Rangewell today to learn more about trade finance services and trade finance solutions. We have a range of financial products available to suit your needs.
Supporting international deals
Overseas suppliers can be paid in their currency of choice, making your business more attractive to them. They can also be paid quickly, helping make it easier for them to accept orders and easier for you to negotiate early payment discounts.
Trade finance can also provide ongoing funding for you, until the final customer payment is received, supporting the end-to-end transaction process.
If you want to learn more about international trade transactions and what financial obligations are associated with this, get in touch today!
Still unsure if trade finance is the right choice for your business?
Our team will explain all your funding options so you can choose the most appropriate deal
If you are starting out doing business in global markets, it’s good to have expert help.
At Rangewell, we can use our trade finance expertise to support your business – and ensure that you have the financial solutions you need. We can help find the most appropriate lenders for the funds you need, who can provide expertise and support, and local knowledge of overseas markets. We can also help with other solutions such as Purchase Order Finance.
If you are ready to take your business further, we can help.
REAL EXAMPLES OF WHAT WE CAN DO...
Help arrange a funding for a small craft-based business to begin exporting to Europe
Find the most competitive funding arrangement for a lighting company ready to pioneer African markets
Find finance to allow an electronics company to buy in components from around the world
Source funding to allow a games manufacturer to begin exporting
Set up finance for an English heritage clothing brand to export to Japan
What people say about trade finance...
We had an order for 5,000 of our radio receivers from a customer in South Africa. We couldn’t afford to tie up that much working finance. Rangewell found us a solution that provided all the cash for the entire deal.
I’d just started dealing in hand made furniture when i had an order from a boutique hotel. I could not fund the deal, but a Trade finance arrangement made it simple.
We had a big order for telecoms equipment. We didn’t know the company, but Rangewell helped us find a lender who could ensure we would be paid as soon as we shipped.
Our goal is very simple - to help businesses find the right type of finance as quickly, transparently and painlessly as possible.
Helping you build your profits
Improve your cashflow
Avoiding the delay between outlay and payment helps you explore new markets and cope with the lag in payments.
Powering your growth
Being able to work in new markets, with new suppliers and new customers can help you grow your business.
A solution tailored for your sector
Some business sectors require specialised funding. If you deal with high-cost or regulated products, you may need a solution tailored around them.
Bad debt protection
Some trade finance providers can include protection against bad debt as part of their services - you will not suffer if a customer fails to pay.
Some providers offer international credit control services, with local skills to help ensure payments in markets around the world.
Trade finance can support international business - letting you explore new markets.
Download Rangewell’s free and detailed guide to Export Finance
Can trade finance help with international trade?
How does trade finance differ from export financing?
Can I use trade finance to boost working capital?
What does it mean to provide a letter of credit/letters of credit?
When does funding usually hit the importer's bank?
How does the lender provide credit to the exporter?
Is there any payment risk with trade finance?
Can Invoice Finance be used for international trade?
Is trade finance the same as supply chain finance?
Who is classed as the exporter?
Understand key exporting terms like documentary collection, exporter bank, prepay for goods shipped, importer to prepay.
What is a bill of lading?
Do I pay the exporter or the exporter's finance company?
Is trade finance global/can I use it to go global?
How finance can assist by providing support in paying suppliers for products and services
Can Trade Finance help SMEs with global trade and does it reducerisk of non-payment of trade transactions?
Do trade finance products require documentary collections or bank guarantees?
What is the difference between a financial institution and financial instruments?
Can I use uk export finance with international trades and payment terms?
Is Export Finance only for goods or services too?
What is an export credit agency?
Are export finance facilities similar to invoice finance facilities?
Does my business need to be registered in England and Wales to qualify?
Are all lenders authorised and regulated by the Financial Conduct Authority and Prudential Regulation Authority?
What are credit insurers?
Does the finance company need to access my purchase orders?
Is Export Finance suitable for cross border trade or trade in emerging markets/international markets?
My business exports goods, is this type of finance long term?
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Frequently asked questions
Have a question?
Do banks give loans for trading?
We'd always recommend using a specialist broker such as Rangewell to source trade finance. Our brokers can offer deals that are entirely tailored to your requirements.
Looking to get into international trade? Rangewell has a wide range of trade finance products to suit your needs. Get in touch today to find out more.
What impact has the new UK/EU relationship had on trade finance?
While the Uk has left the EU, more agreements are being created, amended and implemented, and until those are in place, it may be challenging to offer a clear conclusion of the state of trade finance after Brexit.
How can trade finance benefit my business?
Trade finance loans will help increase profit margins of domestic trade, import, and export. This is because your profitability will go up with larger volumes. Trade finance removes the risk for the buyers and sellers. It is an excellent way to improve cash flow and operations.
Our service is:
Transparent and independent, treating all lenders equally, finding the best deals.
Every type of finance for every type of business from the entire market - over 300 lenders.
Specialist Finance Experts support you every step of the way.
We make no charge of any kind when we help you find the loan you need.