There are effectively two types of trade finance – Purchase Finance and Letters of Credit.There are effectively two types of trade finance – Purchase Finance and Letters of Credit.
Trade Finance for UK Companies
Trade Finance bridges the funding gap between purchasing goods and the final sale to your customer. We will help you to find the right trade finance service.
What trade finance is
Purchase finance
This is short term funding against a confirmed customer order. It is usually available for importers or 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, and is predominantly for goods with high gross profit margins.
The advantages of this funding are: 100% finance (plus duty and VAT), the trade financier relies on the strength of the transaction for security, and it doesn’t affect existing funding lines.
Letters of credit
These 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