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TRADE FINANCE
allows a business to make a sale (either within the UK or overseas) which
may not otherwise be possible because of lack of capital or bank facilities.
TRADE FINANCE is very much based on a single
transaction, and frequently involves the purchase of goods (often from
overseas) which are pre-sold (with a confirmed order as evidence).
The trade financier can provide funds to enable the purchase to be made.
This is of benefit where the supplier will offer no (or only limited)
credit terms.
The trade financier can also help by advancing funds against the sales
invoice produced when the goods are finally delivered.
Examples are the best way of describing...
- A company supplying computer
hardware had the opportunity to supply a Government department with
£2m worth of equipment.
- The specific equipment
was sourced from the USA. The American supplier required payment prior
to the goods leaving the States. With the benefit of a trade financier
a Letter of Credit was opened to purchase the equipment.
- The equipment was supplied
to the Government department on 60 Day terms.
- The letter of credit was
due at the time of shipment, so the trade financier covers the time
gap involved between letter of credit and payment received from the
Government Department.
- After receiving payment,
the trade financier pays the margin to the client.
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Trade Finance can be very confusing; where used
correctly it can facilitate a profitable transaction. As a specialist
brokerage Factoring Partners has helped many businesses with their funding needs. Please call 01789
730137.
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Factoring Partners, P.O. Box 1696, Stratford upon Avon, Warwickshire CV37
0ZZ
Tel/Fax: 01789 730137, Mobile: 07966 492154
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