6 Types of Trade Finance Solutions
Now that you know all about how trade finance works, you might be curious to know what the solutions are.
Although the ultimate goal of each solution is to provide financing, there are 6 main types to fulfil the different needs of businesses.
Invoice Financing
Being one of the most popular forms of financing, invoice financing is where the seller obtains cash advance on invoices due at a future date. The debtor owes the financing company instead of the seller in this case.
While big banks like Barclays, HSBC, Hang Seng, and O.C.B.C offer invoice financing, several alternatives entering the market are helping businesses grow with this facility.
The process of invoice financing is explained clearly in our guide curated by experts.
Purchase Order Financing
PO financing finances the pre-shipment part of a business’s supply chain process. The purchase order works as the collateral in this case, as funds are granted based on the PO issued by the buyer.
Know the pros and cons of purchase order financing with a business example supported by cost breakdowns for a thorough understanding.
Supply Chain Financing
Supply chain finance (SCF) finances the post-shipment part of the supply chain process, covering a business’s end-end supply chain cycle.
It helps unlock funds tied in supply chain tiers like forwarding, intermediaries, and other parties involved. This adds efficiency to the import-export activities in trade finance.
Realise the value of finance in supply chain management to know why it could be vital for your business growth.
Working Capital Financing
Working capital financing is a perfect solution to fulfil a business’s short-term needs. Businesses seeking capital backed without an invoice or purchase order can opt for this solution.
The facility finances a business’s day-day operations to help them meet seasonal demands and cash flow requirements.
Unveil the benefits of working capital financing to know how it could grow your business regardless of whether you are facing cash flow issues or not.
Ecommerce Financing
Ecommerce financing is the latest addition to the trade finance products list. Following the increased demand for marketplaces like Lazada, eBay, Alibaba, JD, Taobao and Amazon, alternative financiers created the eCommerce finance solution.
Find out how eCommerce finance helps online sellers attain liquidity to close their eCommerce cash cycle gap.
Letter of Credit
The letter of credit is a document issued by a bank. Letter of credit is a well-known, widely used trade finance instrument. It adds protection to international trading activities.
There are several letters of credit available, depending on if for personal purposes or business requirements.
Velotrade goes beyond the above products by offering customised solutions to meet every business need.
