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Use Trade Finance to Enhance Supply Chain Resilience

Trade and Inventory finance are the financial instruments to facilitate international trade and commerce. By providing short-term finance, trade finance helps businesses manage the time gap between the production and shipment of goods and the receipt of payment. Essentially, it is the lubricant that allows the wheels of global trade to turn smoothly. 

The Basics of Trade & Inventory Finance

Inventory finance is specifically used to purchase inventory. It helps businesses acquire the stock they need to sell to customers without having to pay upfront, thus maintaining cash flow. 

Trade finance, on the other hand, is the broader range of financial services designed to facilitate international and domestic trade. It covers various aspects of a trade transaction, including purchase orders, TT (telegraphic transfer), Letters of Credit or Documents Against Payment.

These tools simplify the process of making transactions and reduce risks in global trade, such as currency changes, political issues, non-payment, and dealing with different legal systems.

Enhancing Supply Chain Resilience

Trade finance significantly enhances supply chain resilience by giving companies enough money to send and receive goods, helping with stock management and smooth operations even during challenges.

During times of economic uncertainty or when supply chains are strained, the availability of trade finance can mean the difference between a smooth continuation of trade and a complete halt in operations.

Moreover, trade finance can help businesses manage risks more effectively. By paying suppliers immediately, companies can negotiate better prices and eliminate currency fluctuations that impact cash flow. Steady cash flows allow companies to invest in growth and expansion, strengthening the overall resilience of the supply chain.

The Limitations of Traditional Banking Offerings

However, one of the critical challenges with trade finance comes from the traditional banking sector's often inflexible offerings. With their stringent credit requirements and conservative risk assessments, banks may not always provide the most suitable or accessible trade finance solutions, especially for small and medium-sized enterprises (SMEs).

Banks typically favour large, established companies with proven track records. This leaves small businesses, vital to global supply chains in a lurch. This gap can lead to a lack of funding for these smaller players, potentially causing bottlenecks and inefficiencies in the supply chain.

Furthermore, the traditional bank trade finance process can be cumbersome and paper-intensive, leading to delays and increased transaction costs. This lack of flexibility and efficiency can undermine the potential benefits of trade finance, especially in rapidly changing market conditions where agility and responsiveness are crucial.

Switch on the power to close the working capital gap

Our Trade Finance facility puts you in the driver’s seat with up to 120-day repayment terms – empowering you to close your working capital gap.

We can custom-fit a Trade Finance facility based on your business needs.

Our Trade Finance facility gives you the flexibility to look outside traditional banks' rigid terms and conditions. Diversify your working capital funding options and enable your business to scale and grow.

The best suppliers for your business don’t always offer the best payment terms. Don’t let full payment upfront or short payment terms keep you from doing business with the best.

Our Trade Finance line of credit means we pay your suppliers immediately while you pay us back on normal credit terms once delivery has occurred.