Friday, September 15, 2006

Trade Finance Cases

Many of our trade finance deals have been as a result of people contacting us to arrange factoring facilities for them in order to increase their cash flow but once they have explained how the business operates it is apparent that whilst factoring would be of help it would only solve part of the problem.

Factoring or invoice discounting will provide funding once goods have been sold and delivered but for many companies the requirement for finance is at an earlier stage as they need to buy and pay for the goods before they can be sold on.

In the last couple of months we have been approached by an importer of bedclothing turning over £4m per annum, a distributor of specialised electronic equipment to the police turning over £3m per annum and an importer and distributor of electric motors also turning over £3m and all three were looking to factoring to ease the burden on their cash flow.

In all three cases factoring alone was not the answer but we were able to introduce them to a trade financier who offered funding facilities enabling them to buy product, which in conjunction with factoring enabled them to fund the goods all the way from purchase to the customer payment.

Many people think that trade finance is just the discounting of letters of credit but nowadays the trade finance houses are far more creative.