We believe in advising the client and enabling them to take an informed decision.
To succeed in today’s global marketplace and win sales against foreign competitors, exporters must offer their customers attractive sales terms supported by the appropriate payment methods. Because getting paid in full and on time is the ultimate goal for each export sale, an appropriate payment method must be chosen carefully to minimize the payment risk while also accommodating the needs of the buyer. During or before contract negotiations, you should consider which method in the figure is mutually desirable for you and your customer.
The main factor in considering how a trader expects to be paid for a transaction is the potential risk that they and their customer are willing to face between them – hence there are always two sides to any situation. There are different types of risk that a Trader will face.
The main forms of trade finance include Open account, Advance payment, Documentary Collection, Letters of credit, Guarantee (Standby letters of credits), Trade Credit Insurance, Factoring, Forfeiting and Structured Finance.
We provide a variety of trade finance solutions to clients ranging from small to mid-sized enterprises (SME’s) to corporate with significant regional and international business interests.
- Structured Commodity Finance
- Trust Receipt- TR
- Confirmation & Discounting of LC
- Receivable Financing
Our trade finance experts can provide assistance by
- Advising you on the financial aspects of your contract
- Sharing their knowledge of and experience with, local and foreign markets
- Answering questions that you may have about our trade finance products
Opportunities & Risk of Trade Finance
Exporting enables SMEs to diversify their portfolios and insulates them against periods of slower growth in the domestic economy
Reaching the 95 percent of potential customers worldwide who live outside the country.
Diversifying customer portfolios.
Non-payment or delayed payment by foreign buyers.
Political and commercial risks as well as cultural influences.
Brief on Trade Finance Products
Letters of Credit
Letters of credit (LCs) are one of the most secure instruments available to international traders. An LC is a commitment by a bank on behalf of the buyer that payment will be made to the exporter, provided that the
terms and conditions stated in the LC have been met, as verified through the presentation of all required documents.
A documentary collection (D/C) is a transaction whereby the exporter entrusts the collection of the payment for a sale to its bank (remitting bank), which sends the documents that its buyer needs to the importer’s
bank (collecting bank), with instructions to release the documents to the buyer for payment.
An open account transaction is a sale where the goods are shipped and delivered before payment is due,which in international sales is typically in 30, 60 or 90 days. Obviously, this is one of the most advantageous
options to the importer in terms of cash flow and cost, but it is consequently one of the highest risk options for an exporter.
Consignment in international trade is a variation of open account in which payment is sent to the exporter only after the goods have been sold by the foreign distributor to the end customer.
Export factoring is a complete financial package that combines export working capital financing, credit protection, foreign accounts receivable bookkeeping, and collection services.
Forfaiting is a method of trade finance that allows exporters to obtain cash by selling their medium and long-term foreign accounts receivable at a discount on a “without recourse” basis.
How to benefit from this amassing service
Engage us to know more about the products that can help you get an appropriate boost in the business by utilizing the opportunities trade finance provides to SME’s to grow beyond the borders.