If you are an importer or exporter experiencing typical cashflow cycles seen in trade, trade finance may be a suitable method of supporting your business.
Longer trade cycles are often seen in international vs domestic trade. Reasons for this include the need to provide advance payment, longer lead times and bulk ordering.
Key features and benefits
Trade finance can assist with your cashflow by providing structured finance solutions. We analyse your trade cycle to identify your funding requirements and propose an appropriate solution. We may be able to leverage more funds for your business through use of a structured facility.
Solutions for importers include:
Loans Against Import – LAI
If you are importing using documentary methods i.e. letters of credit or documentary collections, we may be able to arrange loans against import to bridge the gap between payment due dates under letters of credit/bills of exchange, and the point at which you are in a position to raise an invoice/get paid.
An overall facility limit is put in place and you drawdown loans against specific transactions/shipments. We calculate your maximum allowable loan term and you can drawdown any number of times up to your facility limit within this timeframe. If you wish to repay early there is no penalty.
Clean Import Loans – CIL
We recognise the fact that you may be dealing on an open account basis with your suppliers and not using letters of credit etc. We can still structure funding for you with Clean Import Loans.
Using a documentary credit means that you may be able to obtain longer credit terms from your supplier as they gain confidence through this payment route and quickly feel more comfortable in doing business with you.
As with documentary credits you maybe able to negotiate better terms with your supplier using this method of trading rather than open account. It is important to note however that there is no bank commitment provided to the supplier.
Solutions for exporters include:
Loans against export
Short term loans can be provided to pay suppliers prior to your goods being exported. Your requirements are calculated by analysing your trade cycle. These loans are generally provided against documentary credits.
Trade Finance (for importers and exporters)
Goods Goods Goods Goods Payment
Ordered Shipped Arrive Sold Received
Goods Goods Goods Payment
Ordered Trucked Arrive Received & Sold