International trade is an integral part of supplying goods for the domestic market. Whilst companies can benefit from the cost advantages of sourcing goods globally, they have to weigh these up against longer lead times, supply chain disruptions, and the need for higher levels of inventory.
Trade finance is typically a layer of short-term finance, over and above conventional banking finance, which can give your business a higher degree of flexibility. Trade Finance 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.
We can provide trade finance in a variety of different ways and in conjunction with value-add services, including:
Payables Finance is provided through a buyer-led programme within 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.
Receivables Discounting is 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.
Forfaiting is a form of Receivables Purchase, consisting of the without recourse purchase of future payment obligations represented by financial instruments or payment obligations (normally in negotiable or transferable form), at a discount or at face value in return for a financing charge.
Factoring is a form of Receivables Purchase, in which sellers of goods and services sell their receivables (represented by outstanding invoices) at a discount to a finance provider (commonly known as the ‘factor’). A key differentiator of Factoring is that typically the finance provider becomes responsible for managing the debtor portfolio and collecting the payment of the underlying receivables.
Loan or Advance against receivables is financing made available to a party involved in a supply chain on the expectation of repayment from funds generated from current or future trade receivables and is usually made against the security of such receivables, but may be unsecured.
Recurring Income Finance
Recurring income finance refers to 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.
Structured Trade Finance
Structured Trade Finance refers to 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. Structured Trade Finance is designed to reduce risk and provide liquidity to traders, especially those involved in cross-border trade, by structuring the transaction in a way that allows financiers to assess and manage the risk associated with the transaction. The financing is often secured against the underlying commodities or receivables, and the terms of the financing are tailored to the specific transaction and the parties involved.