Wondering what trade finance is or if it’s right for the needs of your business? Learn more about trade finance, the benefits and how trade finance is often used by commercial companies.
What is trade finance?
Trade finance is a financial product that facilitates the purchase of pre-sold goods. This assists businesses with inventory and stock management and can help businesses fund new products and purchases. Trade finance is commonly used by importers making commercial business and trades easier.
In what situation would trade finance be considered?
Trade finance is commonly considered in circumstances where a business needs to procure stock to fulfil sales orders, but does not have the cash flow to achieve this from its own resources. In this situation, trade finance is an ideal solution.
What are the benefits of trade finance?
There are a number of pros to trade finance, and how businesses benefit from trade finance can change depending on the circumstance. Some of the most common benefits we’ve come across are:
- Opportunity for commercial businesses to purchase pre-sold goods
- Can fund orders that are larger than usual
- Supports growth and offers flexibility
- Convenient solution for businesses
- Keep your inventory or stock without large upfront costs
How does trade finance work for commercial businesses?
Trade finance is a simple solution where up to 100% of the landed cost of goods (this is the cost plus any applicable VAT, duty and freight) can be funded.
The financier will settle supplier and freight forwarder invoices, take ownership (legal title) and ensure goods are delivered to the end purchaser. Repayment comes at the time of settlement of the sales invoice.
Which commercial businesses could benefit from trade finance?
Most commercial businesses can benefit from trade finance from e-Commerce, manufacturing and media. Velocity Bridging has previously worked with businesses in the following industries:
- Media and TV production
- e-Commerce and retail
- Clothing
- Lighting
- Healthcare
Types of trade finance
Trade finance refers purely to trades where sufficient goods are pre-sold to achieve full repayment.
Stock finance can be available where only a percentage of goods are pre-sold if we can be satisfied with the sales track record of the client.
How Velocity Bridging can help commercial businesses with trade finance needs
Velocity Bridging can aid in the purchase of pre-sold goods, and even with items that haven’t been pre-sold with our stock finance loans. Talk to our trade finance expert to discuss your application and ask questions. Alternatively, you can apply for trade finance.