Trade Finance Industry
The term ‘trade finance’ refers to a financial tool that provides finance for trade on both domestic and international basis. Trade finance is essential to reduce the risk of financial loss specially in international trading. It involves two firms – an exporter or seller who needs payment against the goods or services he provides and an importer or buyer who wants to make payment after the goods or services are delivered to him. Banks and other financial institutions provide support for the conduct of international trade.
How Trade Finance Industry Works
Banks and other financial institutions work as intermediary between the seller or exporter and the buyer or importer. Financial institutions facilitate the companies with their financial tools and services for the seamless operation of international trade and commerce. Trade finance issues a letter of credit to the seller on the part of the buyer with all his essential bank details so that the seller does not hesitate to provide goods or services in advance.
Services Provided by Trade Finance
Bank and other financial institutions act as a guarantor on the part of the importer or buyer for the benefit of the exporter or seller. In case the buyer fails to pay the money to the seller, the banks takes initiative to pay the seller and issues a letter of credit to pay his debt.
Letter of Credit:
Letter of credit is an agreement undertaken by the buyer or importer’s bank to the seller or exporter. It is a legal agreement that ensures that there is no financial loss on the part of the exporter. Under this system buyer is benefited as he can make after receiving the goods or services.
Trade Credit Insurance:
Trade credit insurance shield to the exporters that saves them from any non-payment or delayed payment by the buyers. Insurance companies pay a part of the outstanding to the seller.
Documentary collection is a financial process in which seller’s bank forwards a document to the buyer mentioning the goods or services provided asking the buyer to make payment upon receiving of the documents.
Need help ?
Let’s partner for sustainable success. Get in touch with our support team at:
At heart, A&T Capitals is a venture funding organization that works with different industrial firms to bring entrepreneurs into the syatem.We explore, identify and finally invest in Equity participation in commercially viable projects to transform your dream into a universal reality.
Reduced Payment Risk in Trade Finance Industry
In the past buyers and sellers always used to be worried to make international trade transactions. The seller used to be worried when the buyer will make payment and the buyers were also worried to make advanced payment. Introduction of trade finance ensured the safety of both parties.
Future of Trade Finance Industry
Banking and other financial organisation are adopting more and more technological tools with the advancement of technology. That’s why fintech sector has grown. With more technological advancement in coming days the ease making trade finance business will only increase.
How A&T Capitals Can Help
Venture capital companies provide financial, skill, management and leadership support to companies at initial stage of their venture. If you looking assistance in your business A&T Capitals is the best platform you can find. Here, we have a team of expert and experienced business minds who can guide you to earn maximum profit out of your business. We recognizing high potential ventures and make long-term investments with not only equity capital but with skills fostering the growth of the company.