We seem to be as busy arranging trade finance facilities nowadays as we are with factoring and discounting but unlike the latter where the business models seem to be very similar, the trade finance enquiries that we have been asked to look at are much more diverse.
During 2007 we arranged trade finance facilities for a variety of clothing importers, most of whom were placed with one of the factoring companies that also offered trade finance to be taken alongside their factoring facilities. A further range of importers covering such a diverse range as pushchairs, frozen fish and electronic games were introduced to a different financier who’s offering was slightly different and more suitable in these circumstances whilst we arranged multi million trade finance and LC facilities using our contacts with both a High Street Bank as well as a couple of overseas banks.
We have arranged funding for a steel manufacturer in China who was selling into Brazil, which was slightly different to the more normal deal which is importing from China into the UK
Whilst it is fairly routine now to arrange funding for purchases against firm customer order it is far more complicated to arrange for funding for stock however we do have a couple of sources for stock finance although the criteria is very strict.
Ian
Monday, February 18, 2008
Tuesday, February 20, 2007
Trade finance case histories
The first couple of months of the year has been quite busy for trade finance with a couple of completely different deals worthy of a mention.
A company importing products from the Far East against firm order from a TV shopping channel had funded the transactions from their own resources, reaching a turnover of £750,000 per annum within six months with just two products to this one customer. With the size and frequency of orders ever increasing the company had to turn elsewhere so we arranged a trade finance facility for them in conjunction with invoice discounting meaning that they could now increase turnover substantially without having to worry about financing the sales.
An established and profitable company with a large bank balance received a single order to supply computer hardware to a Blue Chip customer which they were unable to finance as they had to pay for the goods prior to receipt. We were able to source a funding line for them to enable them to fulfill this highly profitable order.
A company importing products from the Far East against firm order from a TV shopping channel had funded the transactions from their own resources, reaching a turnover of £750,000 per annum within six months with just two products to this one customer. With the size and frequency of orders ever increasing the company had to turn elsewhere so we arranged a trade finance facility for them in conjunction with invoice discounting meaning that they could now increase turnover substantially without having to worry about financing the sales.
An established and profitable company with a large bank balance received a single order to supply computer hardware to a Blue Chip customer which they were unable to finance as they had to pay for the goods prior to receipt. We were able to source a funding line for them to enable them to fulfill this highly profitable order.
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.
Ian
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.
Ian
Monday, August 21, 2006
Trade Finance
Trade finance is the provision of finance to companies in order to fund the purchase of finished goods. This type of facility normally co-exists alongside other types of finance such as factoring with the trade finance funding the goods from purchase to delivery to the end customer with factoring or invoice discounting taking over from that point.
Trade finance is normally available to purchase goods for which there is a firm customer order or where there is a proven demand for the product and this can take a variety of forms from purchase finance through letters of credit.
Trade Finance UK has a good relationship with several of the major players in this niche marketplace and we have brokered several quite innovative deals in the SME sector so as our services are completely free of charge why not contact us without obligation to see what we can do for you.
Ian
Trade finance is normally available to purchase goods for which there is a firm customer order or where there is a proven demand for the product and this can take a variety of forms from purchase finance through letters of credit.
Trade Finance UK has a good relationship with several of the major players in this niche marketplace and we have brokered several quite innovative deals in the SME sector so as our services are completely free of charge why not contact us without obligation to see what we can do for you.
Ian
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