Babak Sepasmoqadam & Associates

There are many ways in which a company can finance a trade using trade finance. People often use terms such as stock finance, borrowing base finance or purchase order finance. The main trade finance solution that is usually used and readily available in the market is ‘purchase order’ type trade finance. This is the standard facility when looking at a trading company – either domestically or internationally.

Purchase order finance is most common when there is a purchase order raised by a buyer and the commitment to fund the corresponding seller by a lender. This can be done in various ways – it could be based on a letter of credit payment terms, deposit for goods and later payment, payment following credit terms provided by the supplier or cash against documents.

Trade Finance is important to every business involved in cross-border trade. With a worldwide shortage of trade finance impacting small businesses and capital markets around the world, finding trade finance to fund your deals and provide the advisory services you need is more important than ever. Global Trade Funding provides the kind of innovative trade finance solutions your business needs, each structured to limit your risk and make your businesses more profitable and we can do it today. We are committed to seeing our clients through this shortage of financing by ensuring they always have the trade funding they need.

Another well-known trade finance solution is invoice finance. Whilst not technically trade finance, invoices are used to reduce the overall cost of funding to the borrower. The cost of invoice finance is usually lower than trade finance. Thus, an invoice is raised when goods are sent to an end customer and funds are usually advanced against this. Invoice financiers will typically fund between 75-90% of the invoice value and in the event that a trade line is used, then invoice finance will usually be used to pay it back.