Types of Products offered under Trade Finance www.bandeniachallengerbank.com
A trade finance or trading loan availed from most banks will normally have one or all of the following products and/or services –
1 Letter of credit An undertaking or promise given by the buyer’s bank to the seller that if the latter presents pre-specified documents to the buyer’s bank regarding a transaction as per a purchase agreement, the buyer’s bank will make a payment to the seller
2 Bank guarantee An undertaking or promise wherein a bank stands guarantee on behalf of an applicant in favour of a beneficiary. If in case the applicant fails to deliver to the beneficiary on pre-specified terms or agreement, the guarantor bank will make a payment to the beneficiary upon receiving a demand or a claim
2 Bank guarantee The different types of bank guarantee can be mentioned as follows Tender Bond Advance Payment Performance Bond Financial Retention Labour
3 Bill Collection and Discounting Herein, the seller’s bank collects the payment from the buyer or buyer’s bank for the goods or services purchased
Benefits of Trade Finance
This type of financing scheme helps businesses handle international transactions seamlessly. Customers can electronically process export and import documentary credits, guarantees, and collections.
Using this scheme, business owners can pay their client upfront, irrespective of their geographical location, without having to spend any money at the moment. Borrowers can repay the debt later to the concerned financing organisation within the predetermined period of time.
Businesses have the option to pay their suppliers using their local currency to reduce any currency risk that may come up later. The greatest benefit of this scheme is that it guarantees security on the payments made to a supplier and helps improve the borrower’s relation with them.
The finances under this scheme are usually covered under an insurance policy. This financing scheme helps improve the cash flow within a company by offering the required credit while helping it manage its trade cycles without impacting business relationships.
Using trade financing, the borrower can focus on its growth activities.
UK Address
UAE Trade Desk
Suite 23, Fifth Floor, 63/66 Hatton Garden,London, EC1N 8LE, United Kingdom.
Suite 602, Sixth Floor, Business Village, Block B, Dubai, PO Box 5610, United Arab Emirates.
www.bandeniachallengerbank.com