Trade Finance

Trade finance assists the cash flow of a business when importing goods into a country.

Let’s assume you are an existing furniture wholesaler and you have sourced a manufacturer of unique coffee tables from overseas. Your purchase price is $200 per unit and you have forward orders to sell 1000 of these coffee tables to a retailer at $400 per unit, however you do not have the cash to purchase these coffee tables upfront in order to sell them.

Your importing costs including transport to the designated point of sale is $100 per unit meaning you have a $100 per unit profit on the transaction. Trade finance can fund the entire process from FOB to the delivery of goods at the end users premises. A lend of this nature will require security over the stock being imported and given the size, nature and margins of the transaction, additional real estate security may be required.

If your client pays you on 60-day terms, further options are available to then convert the trade finance facility to a Debtor Finance facility. Please see the TAB for Debtor Finance.