A key challenge for business, particularly those experiencing periods of growth, is access to funding. Without access to the required funding, sales opportunities often need to be turned down that curtails the growth prospects of the business and may result in lost client relationships.

Trade finance is an important funding solution for many small and medium sized businesses and can be hugely supportive to the growth of a business. Also known as import or export finance, purchase order finance or supply chain finance, trade finance can provide a flexible funding solution and be an integral tool for the growth of a business.  

Trade finance works by businesses accessing funding for the purchase of inventory. These facilities are provided by a range of bank and non-bank lenders and typically follow the process of;

  1. Order is placed with your local or overseas supplier.
  2. Supplier then issues an invoice to your business.
  3. The invoice is submitted to your trade financier who will pay the supplier on your behalf.
  4. Within an agreed period, the business then repays back the trade financier.

In recent years, a number of new non-bank trade financiers have entered the market to provide some attractive new trade finance options to business including;

  1. An unsecured trade finance facility that is in addition to a bank provided trade finance facility; and
  2. Structured trade finance solutions that help to manage your inventory levels and provide unsecured funding for new or existing inventory. 

Trade finance facilities can also work well with an invoice finance facility so that the funding is provided across the full supply chain from the order of inventory through to payment being received from the client.

The key benefits to a trade finance facility are therefore to:

  1. Smooth out cashflow fluctuations to the business;
  2. Use the lender’s funds to fund the purchase of stock;
  3. Obtain funding without using property as collateral;
  4. Potentially access early payment supplier discounts;
  5. Maintain strong supplier relationships; and
  6. Access funding on attractive terms;

Like to learn more about your trade finance options? Please contact the CreditSME team for a confidential and obligation and cost free discussion on 1300 001 567 or click here to apply online.

CreditSME is a business loan specialist that arranges trade finance and other business loans for clients with the most suitable lenders on the best available terms

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