Trade finance signifies financing for trade, and it concerns both domestic and international trade transactions. A trade transaction requires a seller of goods and services as well as a buyer. Various intermediaries such as banks and financial institutions can facilitate these transactions by financing the trade. Trade finance allows companies to receive a cash payment based on accounts receivables in case of factoring. A letter of credit might help the importer and exporter to enter a trade transaction and reduce the risk of nonpayment or non-receipt of goods.
Here are some of the types of trade finance that we have briefly summarised, • Trade Credit (Normally the seller requires payment of goods 30 or 60 days post-shipment) • Cash Advances • Receivables Discounting • Term Loans • Leasing and Asset-backed Finance • Other types of Business Finance
Trade finance signifies financing for trade, and it concerns both domestic and international. Bank guarantee has various types like,
1. Tender Bond 2. Advance Payment 3. Performance Bond 4. Financial 5. Retention 6. Labour 7. Ready to Basic analysis