- Trade finance is a catch all term, covering any form of financing in a trade transaction, both domestically and internationally.
- Common forms of trade finance:
- Supply chain finance (aka reverse factoring and payables financing)
- Factoring (invoice financing)
- Purchase order (PO) financing
- Letters of credit and guarantees
- Benefits to using a trade financier:
- Reduced risk – the trade financier can help reduce risk of loss for the seller and the buyer in a transaction. It can serve as a third party check/balance controlling the release of funds once goods or services are provided as promised.
- “Mind the Gap” – trade financiers bridge the gap between the seller and the buyer, controlling the transaction and providing assurances, easing the way for increased transactions.
- Pit crew – Utilizing a trade financier can streamline the financial portion of the transaction, allowing teams to keep their focus on the track.
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Capital Plus, a division of United Capital Funding Group, LLC.