What are the advantages of acquiring trade finance?
There are several advantages that an importer/exporter benefits from when acquiring trade finance and in the following paragraphs we will summerise them for your information. Trade Finance UK helps buyers and sellers to carry out their transactions without fear of the normal risks involved in trading. In trading, there is always the element of doubt in the minds of the parties involved, such as the buyer who has ordered the shipment of goods from a seller or exporter. They may hesitate to advance the payment against a particular order in the fear that the exporter will not send the full consignment of goods. Similarly, the exporter in fear of nonpayment after receipt of goods by the buyer may not send the entire consignment and stall the delivery by sending only part of the order. This can end in a stalemate that both parties would not be able to resolve because there is no trust between them for obvious reasons. The trade finance provided by the banks would ensure that the ordered goods are delivered in time by the exporter because the bank will take guarantee of the payment. The banks issue several payment assurances like letters of credit, bank guarantee, collection and discounting bills which facilitate the smooth transaction of trade between the seller and buyer. The trade financing modules are appropriately designed for the use of traders so that they don’t encounter any hiccups during the process of import or export. Import/export trade is highly lucrative but without the essential help of the banks and financial institutions that finance trade; it may become impossible because they act as an intermediary who wield a lot of authority and authenticity. Trust is a vital element in the business of buying and selling involving a large amount of money and risk. Modern communication technology has hugely reduced the burden of tracking consignments as you can now see the status of your consignment movement at the click of a button. The banks and financial institutions employ the most advanced technology when dealing with traders and their transactions so that they can always track a particular trade that they have financed or guaranteed. The trading of goods between an outside party and a local party has now become easy and smooth because they have an intermediary who can take care of the financial exchange between them. With the arrangements made neither have any fear of losing the consignment or their money, so they trade freely nor forge a longstanding relationship of trade.