Unlock your trading potential without fear.
Choose Key to source the right trade finance.
Trade stress for support.
Stressed about sending goods abroad? Worried you won’t get paid or that you’ll pay for international goods that never arrive? You’re not alone. These are common fears of business owners thinking about trading internationally. But, it doesn’t have to feel like this. When you choose Key, your business’ trade potential won’t be stifled by worries about the financial complications of international import and export. Instead, you’ll receive expert support that will allow you to trade with confidence.
Trade Finance Explained
It’s easy to get lost in the surrounding jargon, but quite simply, trade finance is a coverall term for the financial solutions on offer to help businesses trade effectively.
While trade finance can be beneficial for domestic transactions, it’s most often used for international trade, where challenges like time delays, currency differences, and logistical complications can make the exchange of goods or services feel uncertain.
Trade finance works by bridging the gap between the exporter and importer with funding solutions, and thus making the transaction more secure for everyone.
Types of Trade Finance
Trade finance products are many and varied but there are a few rather common types that you’re likely to encounter when exploring domestic or international trade.
Letters of Credit
A letter of credit acts as an agreement between the buyers bank and the seller, with the bank guaranteeing payment on receipt of goods or services.
Bonds and Guarantees
When a bond or guarantee is used, the bank acts as a guarantor, compensating the buyer if the seller doesn’t fulfill the terms of their contract.
Export Financing
Export financing provides funds for exporters, helping them over the cost of production and shipping while awaiting payment from international buyers.
Documentary Collections
Simpler but less secure than a letter of credit, documentary collection allows the bank to receive payment from the buyer in exchange of shipping documents.
Import Financing
Import financing can provide funds to importers to pay for goods or services upfront, often before they’ve been received or sold.
Working capital loans
Like export financing, working capital loans mean businesses can fulfill orders for overseas contracts while awaiting payment.
Benefits of Trade Finance.
Balance cashflow and minimise impact of payment delay
Protect your business from the risks, like non payment
Optimise your working capital
Increase your revenue through more trade
Improve operational efficiency for international trading
You don’t need to figure it out alone
Exploring the wide range of trade finance options available can often make choosing the right one feel more complicated than necessary. Working with a commercial finance broker with the right knowledge and experience can really open the door for your business’ trade potential.
All of our team understand trade finance and are familiar with the unique criteria and varying complexity of trade finance offers, and so we’ll take care of finding the right fit for you. With Key, you’ll never feel alone.
Trade Finance FAQs
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No, trade finance can be useful for domestic trade as well as international trade. Using trade finance solutions may help a business trading domestically to ease its cashflow, or decrease the risks for both the seller and buyer.
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The need for collateral depends on a number of factors, including the type of trade finance solution being used, and the risks associated with the transaction.
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Yes, there are trade finance options available for businesses that have a poor credit history. The options may be more limited, and fees and terms may be stricter. If you’re struggling to find a finance solution due to your credit history, working with an experienced broker may help you access a greater range of options.
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Yes, small businesses can be eligible for trade finance. Lenders will consider a range of factors, including the company's credit history, the value and type of transactions being performed and the associated risks.
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How quickly you can be approved for a trade finance solution depends on the type of lender and the type of product you’re securing. Timescales can range from 24 hours up to a number of months. Working with an experienced broker can eliminate the risk of unexpected lengthy delays and ensure a streamlined process.
Not Sure How Trade Finance Can Work for You?
If trade finance products don’t seem like the right fit for your current situation, why not explore some of the other financial solutions on offer.
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