fbpx

Trade Finance

Also known as Stock Finance, Inventory Finance and Import Funding.

Navigate the complexities of international and domestic trade with confidence. Our flexible Trade Finance solutions bridge funding gaps, mitigate risks, and optimize your cash flow, ensuring seamless transactions from order to delivery.

Are you facing trade-related challenges?

  • You’ve secured lucrative import or export deals, but lack the working capital to fulfil them.
  • You need to pay suppliers upfront, but your buyers demand extended credit terms.
  • You’re a growing trading business looking to expand into new markets, but are concerned about payment risksfrom unknown international buyers or suppliers.
  • Your existing bank facilities are insufficient or too rigid for the dynamic nature of trade.
  • You’re seeking assurance of payment for your goods or services in cross-border transactions.
  • You need to optimize your supply chain’s cash flow, from raw materials to final product delivery.

If these challenges resonate with your trading operations, our comprehensive Trade Finance solutions are designed to empower your business.

What is Trade Finance and How Can It Help Your Business?

Trade finance is essentially about making sure businesses have the money and security they need to buy and sell goods and services, especially across borders. Think of it as a set of tools that help you manage the financial side of international trade, reducing the risk of your buyers not paying you and helping you get better deals from your suppliers.

It covers a wide range of methods to finance everything from importing raw materials to exporting finished products, and also distributing goods locally.

Common Ways Trade Finance Works:

  1. Trade Credit: This is when a business gives its customers time to pay for goods or services after receiving them. It’s like an informal loan from the seller to the buyer.

    • Unsecured Trade Credit: The buyer doesn’t put up any collateral. This is riskier for the seller but might offer the buyer better terms, like lower or no interest.
    • Secured Trade Credit: The buyer offers an asset as security for the payment, making it less risky for the seller.

  2. Letters of Credit (LCs): These are frequently used in international deals. A bank guarantees payment to the seller on behalf of the buyer, as long as the seller meets specific conditions (like shipping the goods and providing the right documents). LCs significantly reduce the risk of non-payment for the seller.

  3. Export Financing: This is a type of loan specifically designed to help businesses cover the costs associated with preparing and shipping goods for export.

  4. Factoring: With factoring, you sell your outstanding invoices (receivables) to a third-party company at a discount to get immediate cash. This helps improve your cash flow, as you don’t have to wait for your customers to pay.

Why Trade Finance Matters

Trade finance can seem complicated, but it’s crucial for businesses involved in global trade. By understanding these different methods, you can choose the best option to suit your specific needs, manage your cash flow effectively, and minimize the financial risks inherent in international transactions.

How Our Funding Partners Can Help You

Our funding partners and associates specialize in setting up facilities that fund your entire operational cycle. This means they can provide the capital needed from the moment you pay your supplier until you receive payment from your customers.

This powerful solution allows you to:

  • Seize sales opportunities without worrying about upfront capital.
  • Take advantage of purchase discounts by paying your suppliers promptly.
  • Avoid using your own cash for inventory or production!

Whether you’re buying local or imported stock, it can be financed. Payments are made directly to your supplier, or a Letter of Credit is established, ensuring your trade flows smoothly.

Trade finance is for…

Importers

Who need to pay overseas suppliers before receiving payment from their local customers.

Exporters

Who require payment assurance or need to offer credit terms to international buyers.

Wholesalers & Distributors

Managing large volumes of inventory and complex supply chains.

Manufacturers

Requiring funds for raw materials or components to fulfil production orders.

SME's

Looking to scale their trading operations but facing traditional funding limitations.

Commodity Traders

Dealing with significant volumes and often requiring substantial capital.

Loan Conditions

Loan Term: From 3 months
Minimum Loan: R 50 000
Maximum Loan: R 5 000 000
Interest: 13%

Cost Schedule

    • Minimum Term – 3 months
    • Maximum Term – 6 months
    • Minimum APR – 13 %
    • Maximum APR – 30 %

    Example :

    • Loan: R 1 million
    • Term: R 1 year
    • APR: 13 %
    • Repayment: R 1 130 000

    Subject to lenders Terms and Conditions at time of quote

Private lenders receive hundreds of applications daily and only those that are well presented and hold financial merit are considered. It is extremely important that the business that is applying for the loan is profitable and that the borrower has a clean credit record.

While waiting for your Trade Finance/Purchase Order Bridging facility to be set up, which can take up 3 weeks or longer, you should apply for an UNSECURED BUSINESS LOAN of R50 000 up to R6 million, which can be approved in 24 hours (if you have been trading for 12 months, have a turnover of R 1 mill pa and have a clear credit record) 

What is trade finance?

Trade Finance encompasses a range of financial instruments and services that facilitate international and domestic trade by mitigating risks and providing working capital. It’s a vital component for businesses involved in importing, exporting, and distributing goods, ensuring that transactions proceed smoothly and securely for all parties involved.

Essentially, Trade Finance helps bridge the gap between when goods are shipped and when payment is received, offering security and liquidity throughout the trade cycle. It transforms potential trade hurdles into opportunities for growth.

Types of trade finance?

Based on your needs, we recommend the most suitable Trade Finance solution. This could include:

  • Letters of Credit (LCs): A bank’s commitment to pay a seller on behalf of a buyer, provided the seller presents specified documents confirming shipment of goods. This provides assurance for both parties.
  • Invoice Factoring / Discounting: Selling your accounts receivable (invoices) to us for immediate cash. We advance you a percentage of the invoice value upfront, then collect payment from your customer, and remit the balance (less our fees) to you.
  • Pre-Shipment & Post-Shipment Finance: Providing working capital for the production, purchase, or shipping of goods before they are sent (pre-shipment), or providing funds after shipment but before your customer pays (post-shipment).
  • Supply Chain Finance: Optimising cash flow across your entire supply chain, often by facilitating early payments to your suppliers while allowing your buyers extended credit terms.

Key benefits of trade finance

  • Mitigate Risk: Reduce risks associated with international payments, non-delivery, or non-payment, fostering trust between trading partners.
  • Improve Cash Flow: Access working capital when you need it most – for supplier payments, inventory, or operational expenses – without tying up your balance sheet.
  • Facilitate Growth: Enable you to accept larger orders, explore new markets, and work with new suppliers/buyers with confidence.
  • Strengthen Relationships: Enhance credibility with suppliers by guaranteeing payment, potentially leading to better terms. Offer competitive credit terms to buyers, boosting your sales.
  • Optimise Capital Allocation: Keep your core capital free for other strategic investments and operational needs.
  • Flexible & Tailored: Solutions are customized to fit your specific trade cycle, industry, and financial requirements.
  • Expert Guidance: Benefit from our expertise in complex trade transactions and international finance.

FAQs

What is Import Funding?

This is funding that is used to pay an overseas supplier for goods to be shipped to you or your client. Imported goods can take a lot of time to arrive at their destination and so buyers need to have large amounts of cash available, to fund these transactions. Import funding lines of credit are an essential part of this type of transaction.

What is Stock/Inventory/Supply Chain Funding?

This is working capital financing that is used by manufacturers and distributors to fund their purchases and running expenses, while they manufacture or distribute goods.

What Are The Requirements?

We can assist companies if:

  • the company has a proven track record in their industry ( at least 2 years successful trading)
  • there is a confirmed order for goods from a credit worthy customer (must be a company, not a private individual, and not a government or municipal department) accounts receivable funding is possible.
  • the supplier of the goods is an accredited supplier
  • the company can provide the necessary supporting documentation
  • the transaction size is R1 million or more

A monthly discounting fee of up to 7 % pm (subject to due diligence and risk profile) is charged, and a once-off set up fee of up to 3 % (which is dependent on the deal size) is levied for funding capital.

What Supporting Documents Are Needed?

We detail below the documents that we require for capital funding and trade finance. In order to increase the likelihood of us being able to source suitable funding, it is essential that your presentations to us are comprehensive and current. If they lack information it will be impossible to secure an approval.

  • Certificate of Incorporation, Memorandum and Articles of Association or Founding Statements
  • Latest audited financial statements
  • Up to date management accounts
  • Budget and cashflow projections
  • Debtors Age Analysis for the past 3 months
  • Creditors Age Analysis for the past 3 months
  • Documentation with respect to the order:
    • the purchase order from your client
    • the quotation or proforma invoice from the supplier
    • your purchase order to the supplier
  • Statement of personal assets & liabilities of shareholders / members
  • Identity documents of shareholders / members

On receipt of these, the bridging company will indicate its level of interest and call for further information if they wish to proceed.

Apply for Trade Finance

THE BELOW FORM ONLY APPLIES TO TRADE FINANCE, INVENTORY FUNDING AND IMPORT FUNDING. PLEASE ONLY SUBMIT THE FORM ONCE AND CHECK YOUR INBOX FOR A CONFIRMATION EMAIL.