Trade Finance is a finance option that provides funding to aid the purchase of inventory and stock, whether domestic or international. Trade Finance supports small and medium sizes businesses by financing the transaction between themselves and the importer. By doing this, everyone on both ends of the transaction is happy, and your SME isn’t putting their cash flow at risk.
Often trade finance by small or medium-sized businesses is done to improve cash flow while still being able to order stock, without pre-selling the inventory.
However, many small and medium-sized businesses aren’t aware of the comprehensive benefits that trade finance can bring to their business. Trade finance can also be used as a strategic tool for SMEs to maximise their performance and increase revenue.
Cash On Hand
Having cash and easily accessible cash flow ready at all times is a massive benefit to any SME. Trade finance frees up the working capital, which businesses can utilise to pursue additional modes of generating revenue: less stress and more cash.
Improve Local And Global Trade Relationships
Trade Finance allows you to preserve a good working relationship with your suppliers, as they are being paid on time, allowing everyone involved to continue operating effectively. This kind of relationship with suppliers often creates the best trade conditions. You will get better pricing and quality from suppliers or even access discounts, resulting in fewer costs for you, a happy supplier, and a satisfied customer base, therefore increasing revenue.
Respond to Market Opportunities
The market is always subject to fluctuation and volatility. Primarily for the businesses dealing in large quantities of goods and materials, trade finance can provide the option of jumping on a significant market opportunity. You can take advantage of an opportunity, even if you don’t have the immediate funds. It also means that manufacturers, distributors and wholesalers have more room to operate and prepare accordingly because they are being paid straight away andtherecashflow isn’t being hindered.
Increase Business Operations
Trade Finance gives the option for businesses to enter trading transactions without having to dive into their cash reserves. Those funds can then be utilised to continue with their business operations and pay any overheads allowing businesses to operate at their maximum capacity, irrespective of the undergoing trade transactions. With the help of trade finance, multiple business interests won’t conflict with one another, allowing businesses to pursue more avenues to generate revenue freely.
In a trade finance transaction, the stock itself acts as collateral. Since small and medium-sized businesses often possess limited resources and financial backing compared to large enterprises, opting to trade finance services allows SMEs to capitalise on significant trade opportunities and stay competitive in their industry.
With a flourishing global trade atmosphere, trade finance services have helped level the playing field for small and medium-sized businesses to compete with large enterprises. At Grow Finance, we encourage and value the growth of SMEs and recognise the solutions and opportunities they bring to their customers and employees, respectively.
This is why we do our best to facilitate growing businesses with our Trade Finance Solutions, created primarily to cater to small and medium-sized enterprises. Our trade finance requests are often approved within days, with up to 180-day payment terms and a maximum of $3,000,000 line-of-credit.
If your SME is looking to learn more about Trade Finance, contact the Grow finance team today, call 1300 001 420, or visit our website to find out more.