Trade Finance: find new customers across the UK - and beyond

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.

Fulfil big orders to grow your business

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!

Financial solutions from Rangewell

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.