Trade Finance facilities enable businesses to purchase goods within the terms agreed with the supplier by borrowing against the value of the purchase and then paying the lender back once the goods are received or in some instances when they are ultimately sold. Businesses cashflows can be put under severe pressure simply because of the timing when purchases need to be made and the goods are sold.
How it Works
Not all Trade Finance providers are the same but in the main they will assess not only the financial strength of your business but also the credit rating of the seller and also in some cases the credit rating of the ultimate buyer, a combination of these three aspects would determine if a facility was made available to your business.
Once the facilities are agreed the Trade Finance provider will take control of your purchases and pay the suppliers direct, by doing so they take ownership of the goods (which makes up some of the lender’s security), the payments can be made in a number of different ways, letters of credit, direct payments etc depending on the suppliers’ requirements. The goods are then shipped and once they are delivered the client pays the lender the value of the purchases plus interest incurred for the period the debt was outstanding.
There are huge benefits in using Trade Finance facilities when buying goods from overseas. They create a less risky buying environment, they allow a business to manage their cash rather than tying it up in goods that are being shipped and they give business owners more confidence when making overseas purchases.
Liquidity Club work closely with many Trade Finance providers we have a great reputation in this market and have supported many businesses with the buying requirements.