Thursday 12 June 2014

The Benefits Of Trade Finance

By Sally Delacruz


The existence of many methods today makes everything in the trade industry to be easier. One of these methods is the trade finance wherein the exporters and importers of products are financing their business. It is quite simple and a great means for any international trade. If you have an offshore business, you have a greater chance to benefit from a finance support.

Dubai is the most populous city and emirate in the United Arab Emirates. It is the second largest emirate by territorial size after the capital of Abu Dhabi. Actually, trading offshore has numerous risks. When a certain importer pays the upfront fee, but the exporter will only pocket the money without shipping the products. However, there is also a chance that the exporter provides a credit to an importer, but refuse to pay that makes the shipment for a certain delay. This is the situation where finance support comes in.

Financial companies, are mostly offering letter of credits to each exporter made by an importer through banks. This is a credit letter that makes a sure payment for an exporter through a bank that provides the letter with proofs that the goods are already sent and shipped. For companies not utilizing this facility has made a great mistake that might affect the cash flow.

Sometimes, there are confusions of the right time to utilize a trade support. This is beneficial for all import and export companies in a country. It also provides a certain profit for every offshore business. Sometimes, it is because of the cash flow that gives a hesitation for a company.

This situation is just normal. So, it is better to ask the manager about the benefits that a company can obtain. Importers can benefit this facility with the cash flow of their sale goods and purchased products. Exporters can benefit this one as a solution for their shipment financing in any manufacturing method for a proper cash flow before any payment for the goods sold overseas.

This is essential for reducing the administrative, currency and trading risks in the international trading. It is also a great support for an administration of the letter of credits importations. It has also the capabilities to increase the turnover without any threat in the cash flow. The facility is available for companies in the importing and exporting industry process.

It is sometimes complicated for others, but the truth is, it just simple. There are some structures that looks complex, especially in the financing, but it is still best to require a good deal for both parties involved in the entire process. This is why, the amount of loan is high to authorize a higher paid adviser, lawyer and banker.

Due to its simplicity and flexibility, there is a clear overview of every business transaction that is made by most individuals. It is good for monitoring an individual transaction, either transaction from the start up to the last minute of the transaction.. The data can be easily transferred to any spreadsheets for the system to be used again. This is better to reduce the risk of errors.

It has the benefit of a settlement for any discounts from a supplier. It can help for the consolidation of the orders that are obtained for a better shipping rate price for the improvement of bulk prices. It enables to avoid the need to change a commercial banking relationship if this facility is obtained.




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