Trade Finance

When importing goods from overseas, businesses are required to pay the full sum of the goods upfront, or a deposit and the balance prior to shipping which is often a strain on working capital.

Collateral for these loans is usually the goods in transit. Trade finance instruments come in the form of letters of credit, export factoring, export credits, insurance, or lending facilities. Most trade finance loans are short term in nature as they fulfil the purchase of goods and are then paid off once those good are resold.

Trade Finance can offer the flexibility your business needs without the pitfalls associated with traditional forms of finance like having to offer your house as security.

Trade Finance establishes a revolving line of credit to pay your suppliers using someone else's money to settle your accounts payable. This assists growth while smoothing any cash flow gaps.

1. You place an order with your supplier (who may be in Australia or overseas) for a product or service and the supplier issues an invoice to you.
    
2. You then pay that invoice within the terms outlined by your supplier (anywhere from 1 to 90 days).
    
3. On the invoice due date instead of dipping into your cash reserves to pay the invoice, you submit the invoice to your Trade Finance provider who then pay the supplier on your behalf.
    
4. You pay back your financier within an agreed time period.

Our client manufactures a range of bathroom fittings in China. The factories and quality control are excellent and an opportunity arose to land a contract to supply a major trade supplier with $750k per month of product.

The dilemma: The supplier did not provide credit terms and normal bank finance was unavailable as the business was in a growth stage and the Director's home does not have sufficient equity.

The solution: Aussie was able to provide a solution based on the end client's purchase orders and issuing a Letter of Credit to the supplier that guarantees payment on bill of lading (on the ship).  The client is now fulfilling his orders and his home is NOT the security for the business.