Overview on Trade Finance
As the market heats up and the competition looks for a point of difference to win your business, we are seeing more sophisticated options coming out of the big banks trade finance departments to win your business.
- Trade Finance
- Import / Export Letter of Credit
- Foreign Exchange
- Trade finance can provide you with short term finance for the shipment of goods to match the underlying trade transaction time frame.
- Available in Australian or foreign currencies.
- International or Domestic (subject to conditions).
- Pre and post shipment finance.
Import / Export Letter of credit:
- LOC’s are a performance based internationally accepted method of settling trade payments. The terms within the agreement can vary, and cover things such as currency and risk mitigates.
- An Import LOC is a formal undertaking by your lender to pay your supplier, provided they meet the terms and conditions of the document.
- An Export loc is a document whereby your buyer instructs their bank to pay you once the agreed conditions in the document are met.
- If you have the need to deal in a foreign currency, then you need to seek independent advice as to the transaction and risk management solutions to your situation.
FX spot transaction:
- A spot Transaction is an agreement between the lender and you to exchange one currency for another, at an agreed exchange rate on an agreed date.
- Pay a fee to have the option (but not the obligation), to buy (or sell) a specified amount of a currency against another currency, at an agreed contract amount, on a specified maturity date.
- FX forward Contracts can help protect against unfavourable exchange rate movements, while providing some ability to participate in any favourable exchange rate movements that may occur. There is a range of options available, and need to be tailored to your individual circumstances.
Why CPI Finance
Depending on the complexity of your business needs, some lenders processes and platforms will be more aligned to your requirements. Additionally, not all lenders offer this service. CPI Finance can work with you to choose a lender that can integrate your whole business needs.
“These are specialised options and you need to seek advice as to the suitability of the product to your needs. CPI Finance can put you in touch with the right person to talk to”.