After one year of COVID-19 induced restrictions and lockdowns, the use of digital tools in businesses has made a huge leap forward. This is true for small businesses, and for large corporates. And while the pandemic has had devastating effects otherwise, the one bit of good news is that this shift to digital will help the global flow of goods and services for years to come.
In their latest global survey on Trade Finance, the ICC found that by April 2020, banks across the globe were not only scaling up existing digital solutions, but some 55% of respondents were in the process of rolling out new digital solutions.
Is Trade Finance right for my business?
Obtaining good credit terms from your suppliers can be difficult at the best of times. And with finances stretched everywhere right now, it is best to not lock up cash when you don’t need to. Trade Finance can bridge funding gaps between paying your suppliers and getting paid. And with the right provider, you get helpful tools to set your business up for growth.
With external funding available to buy goods, you can negotiate better terms with your suppliers. And you have less headache from the wait for customers to pay you. This principle can be applied to commercial transactions both domestically and internationally.
- Import: gives companies the opportunity to buy goods abroad and close the cash flow gap between paying suppliers and having their customers pay them.
- Export: For companies of all sizes, selling abroad is a great option to take your business to the next level, but it also presents many challenges, especially in these changing times. Export financing helps companies selling abroad to reassess outstanding invoices. You can get additional support by collecting payments from clients.
How does Trade Finance work?
- You get approved for a credit limit by your preferred funding provider
- You place your order with your supplier
- The funding provider pays your supplier against shipping documentation or a letter of credit
- The goods are shipped and delivered to your customers
- You repay the transaction within 90 days from the transaction date or through the use of Invoice Finance
- Your funding provider will recalculate the funds available to you after every transaction so you always know where you stand
If the above sounds complicated, then be assured that the advances in digital tools take care of many of the administrative chores of old. The key to successful growth is selecting the right funding provider for your business. One that understands your trading patterns and that can the amount of working capital that you need as you expand your business.