All what one must know about trade finance

Trade finance is related with financing of trade transactions for both external as well as internal trade. A trade transaction requires an exporter/seller and importer/buyers. A trade transaction in financed various intermediaries such as financial institutions, banks, etc.

Trade finance exits to finance international trade basically. Good trade finance services are very helping in eliminating or reducing the risk of payment and supply involved in an international trade transaction. An international trade transaction is full of risks such as payment risks, supply risk, corporate risk, and country risk. Trade transactions require two players: an exporter and an importer.

Important facts about trade finance

• Trade finance helps in reducing payment risk

  Earlier, neither the exporters nor the importers were sure about the payment related with the international transaction. As the time passes, exported tried to find solution to reduce their risk of non- payment, the importers too were worried about making prior payments to the exporters. But now with the evolution of trade finance, exporters as well as importers are safeguarded against the risk of payment and supply.

• Freeing exporters and importers from stress

  Trade finance has worked as a bridge between financial gap of exporters and importers. So it reduces the pressure on exporter as well as importer by ensuring a guarantee of payment to the exporter and a guarantee of supply to the importer.

• Many trade finance products and services

  Banks or other financial institutions provide various trade finance products or service in order to fit in the needs of various transactions and companies. Most popular ones are letter of credit and bank guarantee.

• Factoring in trade finance

  This method is used by exporters in order to speed up their cash flow. The exporter here sells all of his open invoices at a discount to the factor (trade financier). Then the factor waits for the importer to make payment. This frees the exporter from the uncertainty of bad debts and helps him in trading by providing working capital.

• Forfaiting

  It is a type of agreement where the exporter sells all his receivables to the forfaiter at a specified discount in exchange for cash. But all the receivables must be in guarantee of importer’s bank.

International trade financing

International trade financing is all about financing international transactions that are concerned with international trade. It assists in protecting and securing the exporters and importers. There is various international trade financing services such as:

• Import letter of credit
• Export letter of credit
• Import documentary collection
• Export documentary collection
• EXIM bank delegated Authority lending
• Standby/performance letter of credit
• Discounting and confirmed acceptance
• Trade related lines of credit
• Letter of credit confirmation
• Pre and post export financing
• Borrowing base lending

Business banking

Business banking is all about a company’s financial dealings or contacts with a financial institution in order to avail business loans, credit, savings, and checking account. The two most essential services offered by business banking are: cash management and bank financing.

Export import finance

Export import finance is a sort of finance that is helpful in easy and efficient completion of an international trade transaction. It helps the exporter by providing security against the risk of non- payment and it also provides security to the importer against the receiving merchandise. Export and import finance services include bank guarantees, standby letters of credit, documentary letters of credit, bid bonds, performance bonds, etc.

Relius international bank

Relius international bank is a private bank offering best and efficient trade financing services. The bank provides scalable and flexible trade solution. Relius international bank is having expertise in sharing knowledge and advising on reducing the financial risks.