Trade Finance

A guide to trade finance

The world is a fast moving place. Little stays the same for any length of time. If you are in business, you are likely to be aware of this only too well and recognise that it is the rare enterprise indeed that can afford to stand still.

Growing and adapting your business to changing conditions means increasing your trade and often as not that means your involvement in imports from new suppliers and exports to foreign buyers.

This might be a whole new world to the one with which you are familiar and, as a consequence, may require new approaches to the way in which you finance that trade.

Why you may need trade finance

You may need trade finance to help you increase your share of overseas markets, compete internationally and to find new, competitively priced suppliers.

Increasing your import and export activities carries its own risks as well as opportunities. By taking advantage of the trade finance available, you may be able to obtain the wherewithal to help you expand into overseas markets as well as protecting your trading from some of the particular risks you may face.

Types of finance available

UK Export Finance may act as a long-stop fall-back when other approaches fail, but you might first need to consider finance products such as:

Letters of credit

  • letters of credit offer a secure way of ensuring that your foreign supplier receives the goods you have ordered, whilst at the same time guarding your own business against the risk of non-delivery, incomplete delivery or delays;

Import loans

  • as well as protecting your trading in imports against non-delivery, you may also need the additional financial assistance required to start up such new trading activities;
  • these may take the form of import loans – which may be unsecured or secured against some of your business assets;

Invoice discounting

  • another tried and tested means of raising the additional finance necessary to kick-start new avenues of trade is to tap into the otherwise underused value of your own business assets as represented by your invoices receivable from customers;
  • invoice discounting offers a method of borrowing against the security offered by invoices issued but for which payment has not yet been received;
  • such loans are typically extended to a percentage value of the invoices you have issued and the loan is repaid, together with service charges, once you receive payment on those invoices;
  • since you continue to be responsible for the collection of outstanding invoices, customers are unlikely to know that these have been used as security against loans you have in place.

Why use ACF?

Expanding your trade into new markets may be both rewarding and initially confusing when it comes to raising the finance for such business growth.

This is an area in which we have developed a particular expertise here at ACF Direct.

To tap into our specialist knowledge and experience, simply complete the online enquiry form or contact us by telephone or via email to discuss your plans.

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