Trade Finance - At the Forefront of Global Trade
The Future of MoneyTrade finance accounts for 3% of global trade, worth some $3tn annually. Simply put, it's the financing of trade in a company life cycle, whether you're sending goods, services or commodities, a variety of financial instruments are used to structure this, under the umbrella term 'trade finance'. Trade finance includes Letters of Credit (LCs), export finance and credit agencies, receivables and invoice finance, as well as bank guarantees. There's often a lot of confusion in definitions, so we've put together a guide on how companies can use these instruments in conjunction to finance trade flows.
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Trade financing includes:
- Lending facilities- Issuing Letters of Credit (LCs)- Export factoring (companies receive funds against invoices or accounts receivable)- Forfaiting (purchasing the receivables or traded goods from an exporter)- Export credits (to reduce risks to funders when providing trade or supply chain finance)- Insurance (during delivery and shipping, also covers currency risk and exposure) |
Why is trade financing important?
Trade financing (also known as supply chain and export finance) is a huge driver of economic development and helps maintain the flow of credit in supply chains. It is predicted that 80-90% of global trade is reliant on trade and supply chain finance, and is estimated to be worth around USD $10 trillion a year.
As a result of the global economic crisis in 2008, export markets reduced in size by around 40-50%, SMEs being the hardest hit. As a result, lending decreased as investor's appetite for risk decreased, and banks had to reduce the sizes of their loan books.
As a result of the global economic crisis in 2008, export markets reduced in size by around 40-50%, SMEs being the hardest hit. As a result, lending decreased as investor's appetite for risk decreased, and banks had to reduce the sizes of their loan books.
Who benefits from trade finance?
Export finance has many beneficiaries: developing countries, governments, small and medium enterprises. SMEs are engines for economic growth and development, accounting for around 99% of businesses, 50% of employment and driving around 30% of private sector revenue in the UK.
In relation to export finance and the supply chain, many SMEs play a large role in the running of multinational corporations and larger companies. SMEs require access to finance to fulfill larger contracts, import goods from overseas and create wealth, jobs and develop economies.
In relation to export finance and the supply chain, many SMEs play a large role in the running of multinational corporations and larger companies. SMEs require access to finance to fulfill larger contracts, import goods from overseas and create wealth, jobs and develop economies.
Learn How We Can Help You With Trade Finance
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About Us
We're 100% independent & impartial: working only for our businessesGeo have no ties with any one lender, so can be flexible at offering the product that's right for you, not an off the shelf product that inhibits growth or limits opportunities for your business, no matter how complex. Often the financing solution that is required can be complex, and our job is to help you find the most appropriate trade finance solutions for your business.
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How can we help you with trade finance?
Our team of experts are agnostic of finance product types and will look at numerous financing options to help find the best solutions to help you grow your trade flows. From vanilla trade finance facilities or export finance products right through to complex cross-border commodity trade, our 24/7 team are here to help you grow.
We're often regarded as a CFO or FD, as opposed to an originator or broker of trade finance. We know you're busy running the business, and our dedicated account managers work around the clock to help place you with financing structures as quickly as possible. We're your partners in trade and work with the majority of funders in most jurisdictions around the world. |