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