Benefits of Trade Finance

When an Australian business is importing goods, their overseas seller will often require payment prior to dispatching these goods. This can create a cash flow problem for importers because until they have possession of the goods, they cannot sell to their customers and hence receive payment. In this scenario a Trade Finance facility will greatly assist.

A Trade Finance facility will bridge this gap in cash flow by paying the overseas supplier at the time of ordering the goods. This allows the Australian business to order imported goods with confidence, and often take advantage of more competitive pricing.

The client will then repay the financier at and agreed time and after the goods have been received onshore.

As an Exporter a Business often needs to outlay significant funds to purchase raw materials and manufacture goods prior to being able to ship the goods. Once shipping occurs the business will still wait some time until they get paid by their customer.

In many cases there are significant lead times between receiving a Purchase Order from the overseas customer and being paid by that same customer. This can often make it impossible for some Australian businesses to accept orders from overseas markets.

With a Trade finance facility for exporters, a financier will advance payment using the Purchase Order received by the overseas customer. The Financier is then repaid once the overseas customer pays.

This bridges the gap in cash flow allowing a Business to expand into overseas markets with confidence.