Trade finance is available for the importers of finished goods into the UK. A wide range of goods can be funded with the general exception of perishable and toxic goods. It will invariably be linked to a factoring or invoice discounting facility.

The funding is made available to help those companies with confirmed orders or proven run rates on past sales who have sourced products but need finance to make the transaction happen.

The transaction commences when a company secures a sales order from a credit worthy customer and places an overseas purchase order. The financier will assess the credit quality of both the ultimate customer and the supplier. If the transaction is approved a letter of credit is issued to secure the shipment of goods.

The funding line effectively stays open until the goods are sold. At that point the raising of a sales invoice enables the financier to advance funds through a factoring or invoice discounting facility to satisfy the trade finance liability.

As a guide the financier would always look to secure a debenture over a company’s assets and invariably take a limited unsupported guarantee from its directors.