Structured trade finance is a transactional funding solution to allow a seller to acquire goods on the strength of their customers through confirmed purchase orders.
The advantage of structured trade finance is that gives a business owner the ability to source and sell goods without necessarily having the cash or capital to buy the products from its supplier.
Structured trade finance bridges the gap between the buyer fulfilling a confirmed purchase order and the supplier requiring payment either up front or on shipment of the goods but in either case before the buyer has been able to deliver and/or be paid for the goods it is selling to its customer.
- in a typical structured trade finance transaction, finance is provided by a trade financier to the buyer either by making a payment to the supplier, buying the goods for the buyer, guaranteeing payment to the supplier or lending money to the buyer to pay the supplier of goods.
- the transaction is structured so that the proceeds of sale of the goods are applied to repay the loan and are usually assigned to the trade financier.
Trade finance receivables are commercial debts, sometimes known as accounts receivable. They are generated by the sale of goods and services between businesses and can be one of the largest category of assets on a company’s balance sheet. They are self-liquidating (that is, they generate cash in the form of collections in satisfaction of the debts they comprise) and are typically short-dated (that is, the debts comprising the receivables are paid within a relatively short period of, for example, two to three months).
Our trade finance practice combines thorough knowledge of receivables finance, factoring and invoice discounting. We provide a full service to clients active in all parts of this market: sellers, buyers, financiers and all those in the supply chain.
Our trade finance expertise is spread across a broad range of commodities and structures
- soft commodities;
- mining and minerals;
- power and freight;
- pre-export financing;
- revolving trade facilities;
- advanced payment facilities;
- documentary credits;
- letters of credit;
- bills of exchange;
- collateral management; and
- credit insurance.
We have many years’ experience of advising on trade finance for commodity transactions, their financing, and the resolution of disputes. Our experienced lawyers regularly advise on the whole spectrum of trade finance products, including:
- commodity financing, such as prepayment financing, warehouse/inventory financing and commodity transit financing transactions;
- receivables financing, such as pre-export financing, invoice discounting and supply chain finance programmes;
- export credit agency-backed financings;
- trade finance instruments; and
- in country collateral management.
Our expert team at Francis Wilks & Jones are here to help you with any issues you might have in relation to structured trade finance. Our knowledge of structured trade finance is very broad and we have dealt with many structured trade finance enquiries both for trade financiers and borrowers. Our practical experience and legal expertise means that we can assist whatever the nature of your structured trade finance enquiry.