Trade finance explained

A trade finance transaction requires a contract to be arranged between seller of goods and services and a buyer.

Various financial intermediaries such as banks, financial institutions and trade finance houses can facilitate these transactions by providing either payment for the goods or a documentary credit to provide finance to enable the trade or purchasing the goods and reselling them to their client.

• the trade finance gap arises because the seller wants to ensure he is paid, typically when goods are shipped, and the buyer often wants to order goods but has limited resources to commit to pay for the goods until he receives them and can sell them to his customers;
• so the financier either makes payment for the buyer on credit terms or uses its credit standing to give comfort to the seller that it will be paid and thus facilitates the trade and brings certainty to the transaction.

Trade financiers sometimes buy the goods on behalf of their client and may also provide facilities to pay for the carriage of goods before import, pay duty on import and/or pay freight charges once goods have been imported.

Please contact one of our friendly expert trade finance solicitors now for your trade finance consultation. At Francis Wilks & Jones, we have a team of dedicated trade finance experts ready to take your call and help you with all your queries on trade finance. Whatever your trade finance question, we can help you.