Trade finance is a way of removing the payment risk and the supply risk for those involved in the trade cycle
Trade Finance ensures that you have the cash available to cover the costs associated with the importation of finished goods before the customer has paid their invoice
It also protects you and your customers from late payments, ensuring you never miss out on the cash you need to complete the order and purchase supplies
Purchase order finance
Normally used by SMEs who are unable to take on large orders from customers due to lack of cash resources needed to make a full, upfront payment on goods
Allows you to receive the funding you need for suppliers, staff and other costs as soon as you receive an order
Bridges the gap between an order being placed and paid for by a supplier and the payment is received by the end customer
Provides a fast, effective short-term cash injection allowing you to pay for goods or raw materials that are needed to fulfill a large order
How it works
Your finance partner will work with you, your customer and your supplier to make sure these time frames can be met
Payment is made to the supplier of the product which will allow them to be dispatched
Goods received and you can send onwards to your customer
An invoice is raised to your customer and the finance company pay off their supplier loan and make the balance of the invoice available
Using purchase order finance
If you use purchase order finance to secure stock from suppliers, they'll treat you like a cash buyer instead of having to open an additional line of supplier credit. This will attract better rates for you so you can profit off each other.
Frequently asked questions trade finance
What is trade finance?
This is specific to companies wishing to import goods into the country and need to make payment prior to shipping. A funder will open a letter of credit, which allows for payment and shipment to be made.
What are the advantages of trade finance?
The main benefit is that it allows you to deliver orders that are outside your capacity to fund. The payment is fast, with just a few business days needed to receive the required information, which allows you to take on more business
Who are Alliance Commercial Finance Limited and what do they do?
Alliance Commercial Finance Limited provide bespoke invoice finance, factoring and specialist supplier finance solutions to help businesses fund their working capital.