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Trade finance is funding specifically designed to help business involved in international trade: whether they be exporters, importers, or both. There are several advantages of trade finance compared to more general forms of funding.
The term trade finance generally refers to export finance and import finance. Businesses that trade overseas, or want to start importing or exporting, can arrange an account for both of these with OptiPay, and use them as they see fit in a single, flexible and all-inclusive trade finance package.
Buying and selling is the essence of business, and in general everyone wants to sell as much as possible and buy their supplies as cheaply as can be arranged.
However, even something as good as increasing your sales is not without its consequences: businesses that sell to other businesses (B2B), for example, face difficulties in that they won’t be paid for their goods or services until later; while those importing supplies will find that the payment terms of foreign suppliers are usually less generous than those available domestically, increasing the cash flow impact.
Trade finance works by paying you international purchase orders up front; or in the case of imports, paying your suppliers so that the goods are dispatched. Good trade finance will also allow you to mitigate exchange rate and other risks, and help with the logistics and paperwork.
Here are just some of the advantages to smart, flexible trade finance:
If you have a viable purchase order, or are making a purchase yourself for supplies you need, you can use trade finance to get things moving, even if you don’t have the cash in your account.
It’s not based on your financial history, you don’t need a certain level of credit score or record, and you don’t have to offer assets as security. Trade finance is based on your next deal, and ensures that if you have business in place, you can fund it.
Unlike with debt financing, having one trade finance agreement in place doesn’t decrease your chances of funding further deals. Finance providers are generally happy to fund you if you have the orders.
Because you only set up trade finance when you actually have an order to fund, you are never paying for funds you don’t need. Each trade finance transaction covers a particular import or export order – to the last cent, and no more.
With OptiPay, trade finance is smart and flexible, and you can simply use it when you need it. You are not tied into any long-term deal, but you can always seek more funding.
Many experienced businesses which import and export regularly choose to have trade finance arrangements in place even if they don’t necessarily need the money or the help. This is because trade finance is excellent for cash flow management.
By ensuring that every order is paid upfront, and that your suppliers are similarly paid when you need them to be – but allowing you to pay for those supplies on your own terms – you take charge of your finances and ensure there are no surprises.
Cash flow problems have a tendency to escalate and all businesses should be looking to ensure that their cash flow situation is secure and well-managed.
Trade finance is the smart option, and OptiPay offers smart trade finance. Because we’re a nimble fintech, our import finance and export finance packages are highly flexible and upt you in charge with our online account management system.
Get in touch now and set up the one account you need to import and export as much as you want!
This is Paul, he is one of the directors of UVS, a labour-hire provider to the construction industry. Here’s what he has to say about how OptiPay was able to help his business grow and succeed. Contact an OptiPay expert today to see how we can help you.
OptiPay offers several different funding solutions and services, one or more of which charges no interest and has no long lock in contract period, called the Fully Flexible funding option. Conditions, fees and charges apply to some of the Services provided, which may change, or we may introduce new ones in the future. Full details for all funding options (Services) including any fees and charges which may apply, is available on request. Lending criteria apply to approval of credit products. This information does not take your personal objectives, circumstances or needs into account. Consider its appropriateness to these factors before acting on it. Read the funding agreements provided, for your selected funding solution (product/service), including all the Terms and Conditions contained in agreements provided, before proceeding. *T&Cs: Minimum 12-month invoice funding contract with OptiPay. Direct clients only, offer doesn’t apply to broker introduced clients. All standard credit terms and conditions apply including credit assessment. Not applicable to existing clients.