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Trade Finance
An exporter usually requires payment for goods they export before they arrive at their destination and the importer naturally wants to reduce the risk factor by asking for documentation that the goods have actually been shipped to them.
Trade Finance bridges the funding gap between purchasing goods and the final sale to your customer. There are effectively two types of trade finance - Purchase Finance and Letters of Credit.
Purchase Finance
This is short term funding against a confirmed customer order. It is usually available for:
- Importers / traders looking to source and supply goods within a short time period
- Finished, identifiable goods which are non perishable
- Businesses with experience in their trade
- Predominantly for goods with high gross profit margins
Advantages of this funding are:
- 100% finance (plus duty and VAT) can be provided
- The trade financier relies on the strength of the transaction for security
- It doesn%uFFFDt affect existing funding lines
Letters of Credit
Letters of Credit are used to guarantee payment to the supplier in order to obtain the release of goods. They are available to importers and wholesalers that satisfy the following criteria:
- Where there is a written purchase order for the goods
- The purchaser can be underwritten, or credit insurance is available
- Finished, identifiable goods which are non perishable
- Businesses with experience in their trade
- Predominantly for goods with high gross profit margins
Advantages of this funding are:
- The forward order book can be turned into cash, rather than miss an opportunity
- 100% finance (plus duty and VAT) can be provided
- The trade financier relies on the strength of the transaction, the order and the quality of the ultimate purchaser
- The letters of credit do not affect existing funding lines
Sterling Capital Reserve Ltd
Sterling House
10 Wheatcroft Business Park
Landmere Lane, Edwalton
Nottingham NG12 4DG
Tel: 0115 984 9800
Fax: 0115 921 5550
Map and Directions to our Office
