Trade Finance
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 purchase finance are:
- 100% finance (plus duty and VAT) can be provided
- The trade financier relies on the strength of the transaction for security
- It doesn’t 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 letters of credit 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
© 2012 : Sterling Capital Reserve Ltd
Sterling Capital Reserve Ltd
Sterling House, 10 Wheatcroft Business Park, Landmere Lane, Edwalton, Nottingham NG12 4DG
Tel: 0115 984 9800 Fax: 0115 921 5550
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