Trade Finance (sometimes referred to as purchase order finance) ensures that you have the cash available to fulfill the costs associated with the job at hand. It works when trading internationally or at home.
Here are the basics on how trade finance works. Note that the lender can help with the logistics of delivery if you wish.
Trade can be explained in just a few simple steps:
Step 1 – You receive an order
Your customer makes an order. In order to fulfil the requirements, you need the goods/components from your supplier.
Step 2 – Supplier requests early payments
You speak to your supplier and they request payment up front which is too high to cover.
Step 3 – Lender covers the costs through PO finance
The trade finance lender pays the suppliers and allows you to deliver the goods to your customers.
Step 4 – The profits go to you
The customer pays the balance of the invoice, paying off the lender which also includes pre arranged fees. The rest of the cash is your profit.
You may also wish to allow your customer credit terms of 30-90 days once they receive the goods. In this scenario an invoice finance facility can also be used to fund the invoice that has been raised, allowing you to clear the Trade Finance facility immediately. If this is of interest to you please mention it on the phone to our consultants for more details.
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"Very polite and a professional team of financial advisers who seem to know their business, work well within their industry and get a result."-Invoice Finance Introduction
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