Supply Chain Finance / Trade Finance

A category of Solutions designed to provide working capital financing and accelerated cash inflow to suppliers on the basis of the value of physical or financial supply chain events such as issuance of a purchase order or approval of an invoice. In other words the Supply Chain Finance is a type of cash advance that can be given to the manufacturer or trader in the supply chain based on their credit worthiness as opposed to financing based on the balance sheet of the company or the collateral that the company can provide.

This supply Chain finance becomes more complex and risker in cross border transactions as in Cross Border transactions additional risks involved are

Trade Finance Services

Letter of Credit

A letter of credit, or "credit letter" is a letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. In the event that the buyer is unable to make a payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase. It may be offered as a facility.

Pre Shipment Export Finance

Through pre-shipment export financing product, Trade Finance Funds will advance funds to you (or directly to your vendor) to purchase finished goods or raw materials, and fulfil verified orders from overseas importers.

In Transit Export Finance

In this form of funding the Funds can provide financing to the exporters once they have delivered the goods to the nominated agent of funds. Unlike most conventional lenders, the fund accepts in-transit inventory as collateral.

Benefits:

Warehousing CMA/CMC Funding

Warehouse Receipt Financing is a form of secured funding in which the client delivers legally valid documents of title to the lender that grant security or out right ownership of the commodity to the Lender. Warehouse Receipt Financing provides the Lender with the capability to finance related commodities in storage facilities that may be owned or leased by the client. Any commodity that is actively traded may be financed under WHRF. The commodity must be stored in an approved storage facility, managed by an independent CMC for & on behalf of the Lenders. The structure necessitates that the CMC that issues the Warehouse Receipts, creates a legally independent storage facility.

Export Factoring

Export Finance is a working capital solution that provides you with funding up to 80% of invoice value as well as with the protection against the overseas importer’s financial inability to pay (e.g. insolvency and protracted non-payment for undisputed invoices).

Benefits:

Financing Process

1 Introduction

Introductory meeting and understanding borrowers financing needs.

2 Indicative Term Sheet

Term Sheet proposal, highlighting main T&C for financing.

3 Idue Diligence

Due Diligence including principals, business model and financial review.

4 Credit Committee

Presentation to credit committee for review and approval.

5 Facility

Facility documentation and implementation.

6 DRAWING

First drawing request and disbursement.

Solutions Findoc Can Provide

Bridge the gap between Lenders and Borrowers.

Optimize Cost of Funds for the borrowers

Onboard Exporters/ Importers from all industries

Advisory in reducing the working capital cycle

Support in completion of the documentation required for funding

Creating appropriate structures (onshore and offshore) to increase the Credit Lines

Advisory on creating offshore entities in appropriate jurisdiction to optimize tax

Provide customized Trade Finance Products to best suit the borrowers requirements

Frequently Asked Questions

What is an example of trade?

An example of trade is the spices trade where multiple spices are imported in India and purchased in various parts of the world. Another example of trade is when someone works in sales.

How do banks make money from trade finance?

The banks charge a fee from the customer fro trade finance services, thereby reducing the risk the occurs during trade finance. Banks charge a different amount of fee for different products, depending on the cost to the bank for the service, hence making money from trade finance.

What is the difference between trade finance and supply chain finance?

Supply chain finance is a term coined for recent financing and risk mitigation techniques, more likely to be used with respect to open account trade where the seller and buyer have done prior business. The products of trade finance have been established from long and include bank guarantees, documentary collections, and letters of credit. These products are often used when the buyer and the seller aren’t acquainted with each other and have no history of sale.

How does a trade loan work?

Trade loans aid in the funding of trade transaction all through a firm’s trading cycle along with improving the cash flow of the firm. Trade loans function as fully revolving credit facilities that assist a business with funds during the time it has to pay for raw materials until the time the firms received the funds by selling the goods.

What is trade finance in banks?

Trade finance in banks includes products like Import Bills for Collection, Import Loans, Shipping Guarantee, Guarantees Letter Of Credit, Invoice Financing, Supply Chain Financing, Advising/ Confirmation/ Negotiation/ Collections, Export Bills for Collection Pre-shipment Finance, Letter of Credit and Back-to-Back Letter of Credit.

Why do we need trade finance?

For exporters, trade finance instruments can aid in strengthening the exporter’s competitive power by having the ability to offer supply credits. For importers, it can aid in ensuring that the goods are delivered and finance properly. Additionally, Trade Finance can improve liquidity and enhance cash flow along with reduced risks.

Is trade finance a loan?

No, trade finance is not like traditional loans as the funds are given depending on the current transactions and their customers' credit, rather than on the creditworthiness of you or your business

Is trade finance a good career?

Yes, trade finance is a great good career as it is a big vertical and offers various opportunities to grow.

What does trade finance include?

Trading mediators, like banks and other financial institutions, supervise and aid different financial transactions between a buyer (importer) and a seller (exporter). These transactions can occur internationally or domestically. Trade finance involves multiple types of activities, including issuing letters of credit, lending, forfaiting, export credit and financing, and factoring.

How does trade finance do?

Trade finance concerns both domestic and international trade transactions, signifying financing for trade. In simple terms, trade finance is when an exporter requires an importer to prepay for the goods that have been shipped by the exporter.

What is an example of trade?

An example of trade is the spices trade where multiple spices are imported in India and purchased in various parts of the world. Another example of trade is when someone works in sales.

Trade Finance Blogs

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Mr. Sunny Raheja

President Multi Family office Sr@myfindoc.com +91 8447030050 +91 7743-001863

Mr. Akhil Jain

President Capital Market & Trade Finance akhil@myfindoc.com +91-8837521400

Disclaimer The information contained in this file is provided for informational purposes only, and should not be construed as legal advice on any matter. The content and interpretation of the law addressed herein is subject to revision. We disclaim all liability in respect to actions taken or not taken based on any or all the contents of this file to the fullest extent permitted by law. Every effort is made to avoid errors. In spite of that, errors and discrepancies may creep in. It is expressly stated that neither Findoc Investmart Private Limited nor any of the contributors of updates will be responsible for any damage to anybody on the basis of this document. Readers are, therefore, requested to cross check with the original sources e.g. Government publications, Orders, Judgments etc., before taking any action or making any decision. These services are being provided through our group companies Findoc Capital Mart Pvt Ltd and Findoc Finvest Private Limited

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