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Trade Finance

Export or trade finance allows businesses to fund the financing of goods or services used in international trade. If you trade overseas, you might do so to increase your market share, compete globally and find competitive suppliers to help grow your businesses.

When importing goods from overseas, businesses are required to pay the full sum of the goods upfront – which is often a strain on working capital.

Collateral for these loans is usually the goods in transit. Trade finance instruments come in the form of letters of credit, export factoring, export credits, insurance, or lending facilities. Most trade finance loans are short term in nature as they facilitate the purchase of goods and are then paid off once those good are resold on the marketplace.

Trade Finance can offer the flexibility your business needs without the pitfalls associated with traditional forms of finance like having to offer your house as security.

Trade Finance establishes a revolving line of credit to pay your suppliers – using someone else’s money to settle your accounts payable. This assists growth while smoothing any cash flow gaps.

You place an order with your supplier (who may be in Australia or overseas) for a product or service and the supplier issues an invoice to you.

You then pay that invoice within the terms outlined by your supplier (anywhere from 1 to 90 days).

On the invoice due date – instead of dipping into your cash reserves to pay the invoice, you submit the invoice your Trade Finance provider who then pay the supplier on your behalf.

You pay back your financier within an agreed time period.

Why trade finance

Obtain early payment discounts – suppliers often offer a discount to early paying customers, particularly overseas ones. Take advantage of all the discounts on offer!

  • Eliminate those cashflow gaps.
  • Fund your business without mortgaging your house, your furniture and your first-born.
  • Access foreign markets.
  • Reduce your trade risk.

Better risk management

Late payments can have a knock-on effect, even if it occurs on just one shipment. You may not have the funds available to reinvest in the next shipment of goods.

This can lead to a lower volume of goods you have available to sell, potentially an increase in low volume shipments, and a decrease in overall profitability.

Trade finance can help to decrease the risk of late payments having such a detrimental impact on your business, providing you with the ability to continue to invest into the growth of your business

If you need help with a trade finance product, make sure you give us a call today. We can customise a finance package that suits you and your business.