A Thing or Two about Trade Finance What exactly is Trade Finance? Trade finance is a process of financing activities such as lending, issuing letters of credit, factoring, export credit, insurance and other activities related to commerce and international trade. Companies and entrepreneurs that are likely to be involved with trade finance include importers and exporters, insurers, banks, financers, export credit agencies and other service providers. This type of financing intends to protect the interests of buyers and sellers in international marketplace. It assists in the completion of transactions that may involve multiple currencies. Trade finance is subject to be used solely for the completion of a particular financial transaction. And repayment terms of the trade finance related activities are generally short-term. This example would help you understand the term better: An exporter expects an importer to repay for the goods shipped. While in an attempt to risk, the importer would ask the exporter to document that the order placed has been shipped in good condition. The importerâ€™s bank assists by providing a letter of credit either to the exporter or their bank providing for payment upon the presentation of certain documents, such as a bill of lading. Further, the exporter's bank may make a loan to the exporter based upon the export contract given. Documents used in the process are drafted on the nature of the transaction and evidence of performance (bill of landing to show shipment). Key benefits of trade finance
This type of financing allows you, the borrower, to handle international transactions in a seamless manner. Documentary credits, collection and guarantees can be processed electronically. And this is applicable to both import and export documentary credits and collection. It makes you keep a tab on your business’ transaction and financial position, enabling you to monitor each individual transaction from start to finish. Data can be transferred to spread sheets and reused in the system that saves your time and minimises the risk of errors. Reputed finance companies like Global Capital Commercial offers credit protection in order to minimise the risk of bad debt and advance delivery of goods. This type of finance is flexible enough, thereby allowing you to determine when and how often you need the cash. The facility grows in line with your business' turnover. For more information about trade finance, consult an alternative lender like Global Capital Commercial. The company provides a number of facilities like additional credit line, consistent cash flow, unsecured loans (with no collateral), fast-in approvals, no conflict with current bank facilities, and other such facilities for seamless processing.
To know more about trade finance in Perth, visit: Gccbusinessfinance.com.au
Published on Jan 13, 2017
Trade finance is a process of financing activities such as lending, issuing letters of credit, factoring, export credit, insurance and other...