No matter what business you are in, fulfilling customer orders and increasing sales revenue will undoubtedly be one of your main priorities. However, at times fulfilling those orders can put pressure on your cashflow especially if your supplier demands upfront payment before goods are despatched. Bridging the gap between paying suppliers and receiving payment from customers once goods have been delivered can pose a challenge which threatens to disrupt your business cashflow and put transactions at risk.
Trade finance enables many businesses to purchase goods and fulfil customer orders both domestically and internationally. If you are looking for ways to expand your business, trade finance could be a viable solution for you.
What is trade finance?
Trade Finance is a funding solution used across the world and is a collective term for a range of funding solutions that enables trade to happen be that in the UK or internationally. Essentially it bridges the gap between the business buying the goods and paying their supplier and delivering the goods to the customer and receiving payment.
The term Trade Finance is used to cover a range of different financial solutions that finance companies can offer:
- Letters of Credit – In this case, the importer's bank makes a promise to the exporter that it will make a payment for the cost of the goods supplied once the transaction has been completed.
- A bank guarantee: This is where, a bank acts as a guarantor in case the importer or exporter fails to fulfil the terms and conditions of the contract. This means the bank would pay a sum of money to the beneficiary.
- Factoring: A funding solution which sees a business sell their invoices to a funder who then pays the supplier whilst collecting invoice payment from the end customer.
- Forfeiting: This is when an exporter sells all of their accounts to a forfaiter at a discount in exchange for cash.
- Lending: Lending lines of credit can be issued by banks or other providers to help both importers and exporters.
- Insurance: This can be used for shipping and the delivery of goods.
Is trade finance right for my business?
If your business purchases and pays for finished goods upfront before supplying them to your customer, then Trade Finance can help to smooth out the cash drain that your business will experience.
How does trade finance work?
Trade finance helps reduce trading risks especially if a firm is dealing with overseas suppliers. The risk of something going wrong is real from issues caused by political instability, currency fluctuations, non-payment of invoices, or indeed natural disasters such as a Pandemic!
Why choose trade finance
Trade Finance can help your business confidently secure more orders because you have the peace of mind that you will have the funds to pay your suppliers helping you to increase your revenue generating opportunities. It also brings efficiency to your business as payments are made on time helping you to manage your cashflow more effectively.
- Improved buying power – We pay your suppliers upfront ensuring you can purchase the goods you need when you need them
- Protects cashflow – you retain the capital you need to put to good use in your business
- Boosts confidence – Continue selling knowing you can fulfil customer orders
- Flexible ongoing source of working capital – When used in conjunction with an Invoice Finance facility you receive an upfront payment of up to 90% of the value of your outstanding invoices and up to 90% of each invoice raised with the level of funding growing in line with sales
- Improved financial strength – allows negotiation on price for upfront or early payment discounts with suppliers boosting profitability
Who can take advantage of Trade Finance?
A wide range of businesses can benefit from Trade Finance. Pulse Cashflow can help:
- Established businesses with one year of trading history
- UK Businesses trading with other businesses on credit terms both overseas and in the UK
- Limited companies projecting £1m up to £20m+ turnover
- Firms requiring funding between £100k and £2.5m and looking to access a trade finance facility of up to £1m
- We support a wide range of industry sectors including manufacturing, and wholesale & distribution
Let Pulse Cashflows’ Trade Finance solution help your business.
Our new Trade Finance solution could be the answer to your trading challenges. We offer our Trade Finance solution in conjunction with one of our Invoice Finance products, which are used in combination with each other to provide your business with a comprehensive solution. They will provide you with the cashflow solution you need and the flexibility of payment options to meet your supplier needs too!
Our solution gives you the working capital you need and the flexibility of payment options that will enable you to trade more confidently and take advantage of the opportunities you come across.
Our Trade Finance solution can be put in place to fund confirmed orders from your customers in as little as five days and can:
- provide up to £1m of funding available to purchase upfront stock
- enable additional funding via an invoice finance facility from £100k - £2.5m
- deliver confidential facilities and selective facilities to meet your needs.
How much does it cost?
Pulse Cashflow charge a single monthly fee on average 2% - 3% of funds advanced per month. The only other cost is a one-off arrangement fee but there are no minimum annual fees.