Thursday, June 5, 2014

The Benefits Of Trade Finance

The Benefits Of Trade Finance

By Sally Delacruz


There are already lots of methods used in the business industry. Trade finance is one of them that helps importers and exporters to finance their business. It is just a simple method but a has a greater means for all international trades. For most offshore businesses, this is their chance to benefit from this financial support.

Dubai is the most populous city and emirate in the United Arab Emirates. It is the second largest emirate by territorial size after the capital of Abu Dhabi. Actually, trading offshore has numerous risks. When a certain importer pays the upfront fee, but the exporter will only pocket the money without shipping the products. However, there is also a chance that the exporter provides a credit to an importer, but refuse to pay that makes the shipment for a certain delay. This is the situation where finance support comes in.

Financial institutions are the one that offers a letter of credit to the exporter through banks. This is a payment with a proof that goods are already shipped. For small companies that are not using this facility, may due to its effect to their cash flow.

Sometimes, there are confusions of the right time to utilize a trade support. This is beneficial for all import and export companies in a country. It also provides a certain profit for every offshore business. Sometimes, it is because of the cash flow that gives a hesitation for a company.

This situation can be answered by any bank managers. For importers, a finance for trading is a support for their cash flow of purchasing and sale goods. For exporters, it is a great solution for their shipment process and financing in the manufacturing method.

It is beneficial to reduce the trading, administrative and currency risks in the international market. It is a great support for paperwork importation and administration or for letter of credits importations. It has also the capacity to maximize the turnover without threatening the cash flow. This facility is highly available for most importers and exporters for pre and post shipment process.

Sometimes others would assume that it is a complicated process, but it is not. Although there are complex structures, but with proper dealings of each party, it can be easily resolved. That is why, the amount of loans is higher to order a higher paid lawyer, adviser and banker.

Since it is simple and flexible to utilize, there is always a clear overview when it comes to business transactions. It can monitor each individual transaction from the beginning to the end. The data can also be transferred easily to spreadsheets and the system can be used again that saves more time and minimize the risk of an error.

It has the benefit of a settlement for any discounts from a supplier. It can help for the consolidation of the orders that are obtained for a better shipping rate price for the improvement of bulk prices. It enables to avoid the need to change a commercial banking relationship if this facility is obtained.




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