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Trade finance

Trade finance

Trade finance is an important external source of working capital financing. It is a form of short-term credit typically used by companies that export or import goods.

There are a number of banks and specialist finance providers that offer trade finance.

The advantages of trade finance are:

  • it is a relatively easy way to arrange short-term finance
  • it helps business to focus on growth activities
  • ihe finance is typically secured against the goods or backed by an insurance policy

Disadvantages of trade finance are:

  • it is usually based on having a good track record in terms of operations and repayments, and therefore less accessible for new companies
  • it can be very expensive, if payments are not made on time

Need more information? Please visit the trade finance page on www.wikipedia.org