Import Finance is short-term finance, funding the gap between receiving the goods and sending the payment. It is generally provided by a third party. Import transactions can be a substantial drain on a company’s cash flow because of delays and obstacles. Many times, payment is made in advance for the goods to be delivered. And the Company’s cash-flow burden, changing freight rates, and import tariffs add costs and uncertainty to the transactions.
One of the many ways to get import financing is by approaching financial institutions like banks and credit unions that offer options including asset-backed loans, regular loans, business credit cards, and overdrafts.
funds understand that, while they might work for some businesses, the reality is that traditional financing is not easy and usually require long-term contracts as well as huge collaterals. Therefore importers might want to explore other options. This is where funds step in and reduce the cumbersome process of procuring import finance.
Features of Import in Trade
Relationships between buyers and sellers are based largely on trust. It is easier to have a rapport with your supplier if you trade domestically, but what if your supplier is not well known, perhaps based overseas? Although around 80% of global trade occurs on open account terms (buy now, pay later), suppliers may ask for an upfront payment.Read More
Bank Guarantees are exactly what it sounds, a guarantee from a bank that certifies the creditworthiness of a buyer. Bank offers to fulfill the financial obligations of the buyer, in the scenario when the buyer cannot and it also promotes confidence for the transaction. The seller may request a guarantee of payment to feel more secure in producing/ shipping the goods.Read More
Invoice financing is a method of financing which involves the selling (or shift of liability) of their accounts receivables. It is a way for businesses to borrow money against the amounts due from customers. A third party – usually an Invoice Finance firm – will purchase or commit to the invoices, paying a discounted price for them or taking a fee for the transaction. Invoice financing helps businesses improve cash flow, pay employees and suppliers, and reinvest in operations.Read More