17 October 2014

Trade & International Finance

international trade financeTrade & International Finance

More UK small businesses are trading overseas than ever before. This does not just relate to product but services also.

The biggest barrier to undertaking more overseas trade is often finance, or the funding of the trade cycle. For many small businesses the idea of trying to finance international trade can be daunting, however it really shouldn’t be like that. We can help.

Lime Consultancy have a background in working with trade finance and international trade lenders who can help small businesses finance their overseas trade, whether that be import or export.

Here is the basic idea of what we do.

Trade Cycle

This is a basic trade cycle of a UK business importing product from abroad

Business Trade CycleIn this example the trade cycle lasts 100 days, which is from the order being placed to cash being received. The line below shows how the trade cycle can be financed, essentially;

  • Funds are sent to the supplier on your behalf
  • Title to the goods remains with the trade finance lender
  • A local agent is used to check the goods prior to shipping
  • On landing in the UK the company sells the goods and invoices their buyer
  • The invoice is financed through an invoice finance facility which repays the trade finance provider and passes the surplus, or profit, to the business

What this does is reduce the need for the business to cash finance the trade cycle, it then frees the business to win more contracts, sell more goods and grow.

Why Trade Finance Works

Essentially it works because of the tangible nature of the transaction. The lender has title to the goods so can retain this until they are paid, they also know that as soon as the goods are sold they will get repaid. The invoice finance provider likes it because they can see how the transaction will work, they have goods to track and a provable invoice to rely on.

Strange as it may seem, but international trade finance is a lot more accessible than overdraft funding.

The Non-International Win Win

The model above is based on importing goods from abroad. The same trade finance solutions can be used for companies operating within the UK. This is so often missed, you don’t have to be trading abroad to use this type of finance. If you are at all unsure of your options then call us on 01293 541333 or contact us here and we will talk you though it.

Why Use Lime Consultancy For Trade Finance?

The benefits are simple;

  • We are independent and use the best trade finance lender for your business
  • We have experience in the trade finance field, Lime Consultancy’s founder David Farmer worked for a leading international trade bank for over 20 years
  • Lenders like us. Because we understand how these things work, our clients are generally better prepared, more aware and more open to do business. Because of this trade finance lenders are always keen to work with us

For any trade finance, whether that be domestic or international then please get it touch as we are ideally placed to work with you.

 

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