In simple terms, import finance is the funding of the gap between receiving the goods and sending the payment. Due to the gap in payment, a certain level of trust is required between all the counterparties and it is due to this, that there are many types import finance.
- usance letter of credit: when a usance letter of credit is used in an import finance transaction, it allows payment from the buyer to be deferred. This gives the buyer more time to inspect and sell the goods;
- standby letter of credit: when a standby letter of credit is applied in a transaction, it allows the seller of the goods peace of mind surrounding payment, as it is a guarantee of payment and in most cases issued by a bank;
- bill of exchange: operates like a cheque and is a promise to pay a certain sum on a specified date in the future. This is often payable at the bank of the issuer when confirmed by the bank;
- bank guarantees: bank guarantees are a guarantee from a bank that certifies the creditworthiness of a buyer. They do this, by offering to fulfil the financial obligations of the buyer, in the scenario that the buyer cannot fulfil the financial obligations;
- invoice finance: invoice financing is a method of financing which involves the selling of the accounts receivables generated by the sale of goods.
Our team of banking and finance solicitors can advise you on the benefits of import finance. Import finance can be off-balance sheet finance, which means they may not affect existing bank facilities of the importer if they are secured on the trade rather than the assets of the importer.
Our expert team at Francis Wilks & Jones for all your import finance queries. Our knowledge of trade finance is very broad and we have dealt with many enquiries relating to export finance and import finance. Our extensive experience and legal expertise means that we can assist whatever the nature of your import finance enquiry.