DIFFERENT TYPE OF TRADE FINANCING
International trade finance companies is a type of company that aid financial help to any small and startup businesses. Trade financing is trully a big help to any business,but in order for you to choose the correct financing you have to know the different type of trade financing so you'll know what will fit your needs.
cheapest payment type. It is the simples because the seller can provide any product or service obligation with the payment scheme of 30, 60, or 90 days.
There are business owners who doesn't want on a taking a risk, what they do is they often take out an insurance to protect themselves against potential non-payment.
Type of Trade Finance
Trade Credit Trade credit is one of the simplest and
Cash Advance Cash advance is a fund given to the exporting company as a form of
payments, before the goods or services are delivered. Cash advance financing is usually common to seller because once they receive an order they could start manufacturing their goods right away. On the other hand, with the fact that the production could possibly be delayed which as a result may never fulfilled the order.
is a form of advance payment the financier pays to the supplier for the goods and services to be delivered.
Purchase order (PO) finance Purchase order finance
The main aim of this type of finance is for the supplier to pay first the funding neeeded for the whole trade process. Receivables discounting
Receivables discounting is a form of immediate payment, by sending self invoices, post dated cheques, or exchange bills to bank finances. It is like a security for the lenders to give an urgent cash to solve any cash flow problems. The discount
rate can be calculated based on the risk of the default. Export finance
Export finance is a form of loan, in which the exported goods are the main collayeral.
With having a collateral an 80% of the good's value is often fund up by the financer, but it varies depending on the risks.