Trade finance accounts for 3% of global trade, worth some $3tn annually. Simply put, it’s the financing of trade in a company life cycle, whether you’re sending goods, services or commodities, a variety of financial instruments are used to structure this, under the umbrella term ‘trade Finance’.
Trade finance includes Letters of Credit (LCs), export finance , export factoring and credit agencies, receivables and invoice finance and invoice factoring, as well as bank guarantees.
There’s often a lot of confusion in definitions, so we have put together a guide on how companies can use these instruments in conjunction to finance trade Cashflow.
How can Global Asset Finance Limited help you with trade & supply chain finance?
- The Global Asset Finance team work with over 300 plus banks, FIs, pension funds and alternative financiers across multiple geographies and jurisdictions to help companies access finance fast.
- We have product commodity specialists, from cashew nut experts to scrap metal and oil gurus, who work collaboratively, help companies grow their trade lines both internationally and domestically.
- Our team of experts are knowledgeable of finance product types and will look at numerous financing options to help find the best solutions to help you grow your trade Cashflow.
- From vanilla trade finance facilities or export finance, export factoring products right through to complex cross-border commodity trade, our team are here to help you grow your business and improve your Cashflow.
- We know you are busy running the business, and our dedicated account manager’s work around the clock to help place you with financing structures as quickly as possible. We are your partners in trade and work with the majority of funders in jurisdictions around the world.
- At Global Asset Finance Limited, we know who the decision makers are, the key influencers and managers at banks, financial institutions and funds, so it’s often easier and faster to get to the right person quickly and speed up your application.
Global Asset Finance have no ties with any one lender, so can be flexible at offering the product that is right for you, not an off the shelf product that inhibits growth or limits opportunities for your business, no matter how complex.
Trade & Supply Chain Finance includes:
- Lending facilities
- Issuing Letters of Credit (LCs)
- Export factoring (companies receive funds against invoices or accounts receivable)
- Forfeiting (purchasing the receivables or traded goods from an exporter)
- Export credits (to reduce risks to funders when providing trade or supply chain finance)
- Insurance (during delivery and shipping, also covers currency risk and exposure)
Why is trade finance important?
Global Asset Finance Limited (also known as supply chain and export finance) is a huge driver of economic development and helps maintain the flow of credit in supply chains. It is predicted that 80-90% of global trade is reliant on trade and supply chain finance, and is estimated to be worth around USD $10 trillion a year.
As a result of the global economic crisis in 2008, export markets reduced in size by around 40-50%, SMEs being the hardest hit. As a result, lending decreased as investor’s appetite for risk decreased, and banks had to reduce the sizes of their loan books.
Who benefits from trade finance?
Export finance has many beneficiaries: developing countries, governments, small and medium enterprises. SMEs are engines for any economic growth and development, accounting for around 99% of businesses, 50% of employment and driving around 30% of private sector revenue in the UK.
In relation to export finance and the supply chain, many SMEs play a large role in the running of multinational corporations and larger companies.
SMEs require access to finance to fulfil larger contracts, import goods from overseas and create wealth, jobs and develop economies.
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