Learn a little more about Trade Finance

Mar 4, 2024 | Education

Trade Finance South Africa

What is Trade Finance?

A layer of short-term finance, over and above conventional banking finance, which can give your business a higher degree of flexibility.

It is tailored to match your cash flow cycle and can help support growth through increased sales of core products or new lines as well as alleviate longer debtor repayment cycles.

What Trade Finance options are available?

A set of techniques or financial instruments used to mitigate the risks inherent in international trade to ensure payment to exporters while assuring the delivery of goods and services to importers.

Available in a variety of different ways and in conjunction with value-add services, including:

  • Payable Finance
  • Receivable Finance
  • Recurring Income Finance
  • Structured Trade Finance

What is Payable Finance?

This is provided through a buyer-led programme in which sellers in the buyer’s supply chain are able to access finance by means of Receivables Purchase.

The technique provides a seller of goods or services with the option of receiving the discounted value of receivables (represented by outstanding invoices) prior to their actual due date and typically at a financing cost aligned with the credit risk of the buyer.

The payable continues to be due by the buyer until its due date.

What is Receivables Discounting?

This a form of Receivables Purchase, flexibly applied, in which sellers of goods and services sell individual or multiple receivables (represented by outstanding invoices) to a

finance provider at a discount.

What is Recurring Income Finance?

This is a type of financing that is based on the borrower’s regular income from various sources, such as rental properties or a business.

Lenders use this income to evaluate the borrower’s ability to repay the loan and determine the loan amount and terms.

This type of financing is often used for personal and small business loans.

What is Structured Trade Finance?

This is a type of financing that is used to fund the trade of commodities or goods.

It involves complex and structured transactions that may include various financing instruments, such as letters of credit, pre-export financing, and other forms of financing.

It is designed to reduce risk and provide liquidity to traders.