There are several types of trade finance facilities but most commonly this facility is used to pay suppliers and then bridge the cashflow timing difference until you receive the funds from your customers. These facilities are typically used for companies that internationally trade as goods often have to be paid for before they are shipped, and then it can take time to get the goods to the UK, complete the relevant quality checks and then distribute the goods. This can cause cashflow issues with the extensive gap between paying your supplier and receiving any funds for the goods.
Other options of trade finance include, but are not limited to the following:
- Bonds & guarantees
- Letters of credit
- Foreign exchange
