1. Trade Finance Instruments
Trade finance instruments are common technique solutions that are used globally to facilitate international trade. They include the following:
Letters of Credit (L/Cs) – A common method where a bank guarantees payment to the exporter once the importer’s conditions are met, such as the proper delivery of goods. This reduces the risk for both importers and exporters by providing guaranteed payment upon compliance with specific terms and conditions.
Standby Letter of Credit (SBLC) – A Standby Letter of Credit (SBLC) is a bank guarantee that acts as a safety net for a transaction, promising to pay the beneficiary if the applicant fails to fulfill their contractual obligation. Unlike a traditional Letter of Credit, SBLC is a “standby” payment method used only in the event of default such as non-payment or failure to perform a contractual duty.
Advance Payment Guarantee – A method where the buyer pays the supplier before goods are shipped; for example, payment made to contractors or suppliers. This protects the supplier but carries risk for the buyer. This instrument safeguards against the risk of non-delivery or non-performance.
Bank Guarantees (BGs) – A bank guarantee is a commitment from a financial institution to cover one financial obligation if a party in a transaction defaults. Bank guarantee helps businesses acquire goods, engage in international trade, and increase access to cash flow by reducing perceived risk in transactions. Besides its use in international trade, it is also used to secure performance in the construction of real estate and infrastructure projects.
Performance Guarantees – Also known as Performance bond, is a financial instrument against non-performance of contractual obligations, providing security for project owners and beneficiaries.
2. Buyer’s Credit
Buyer’s credit is a short-to-medium term trade finance loan, offered to qualified foreign importers through an overseas bank, to pay foreign suppliers immediately.In most cases, to access the loan,the foreign importer works with his supplier through the designated banks in the exporter’s country. Typically, 85% of the value of the goods are covered by the lender, in countries that offer this method of import financing and the duration ranges from 180 to 360 days. Eligible goods are usually capital goods, services and projects ; consideration is not usually given to consumer goods in most cases. However, for importers from Sub-Saharan Africa and other parts of Africa that are looking to finance consumer goods, countries such as Turkey, Brazil, Sweden and Switzerland, offer financing for both consumers as well as capital goods., services and projects.
3.Invoice Factoring
Factoring (or Invoice Factoring) is a financial arrangement where a business sells a portion of its unpaid invoice
to a third-party financial company (a “factor”), for immediate access to working capital rather than wait 30,60 or even 90 days, to collect payment after the goods have been delivered. We partner with RTS International
Export Factoring Company, to provide this service to exporters in Sub-Saharan Africa and other parts of Africa. RTS International is based in the United States, with presence in over 40+ countries. RTS International has been in business for more than 20 years, with close to 3 million employees and a gross revenue of $33.1 billion.
How The Process of Invoice Factoring Works With RTS International
1. Submit Your Invoice
When your product ships or service is completed, send RTS International the invoice and corresponding documents.
2. Receiving Funding
RTS International finance 80-90% of the value of your invoice within 24 hours.
3. Release of Reserve
Once your buyer pays the invoice, RTS International will send the reserve to your company, minus the small finance fee.
Benefits of Factoring for International Trade
- 80-90% of total invoice is provided within 24 hours
- Payment deposited directly into your bank account
- Increased cash flow without borrowing or taking out a loan
- Focused on your customers’ credit, not yours
- Free ongoing credit evaluation and customer collection
- Unlimited access to capital increase as your business grows
4. Business Loans
Business loans and other types of financing can be accessed only by small-and-medium sized businesses located and doing business in the United States, on Swoop Funding platform online.
Swoop Funding is a legitimate business broker, based in the UK and was founded in 2018, and has operated for several years with over 100,000 customers globally, including major partnerships in the UK, Ireland, US, Canada, Australia, and South Africa. They are authorized by relevant financial authorities in the UK, including the Financial Council Authority (FCA).
Various types of business loans, equity and grants, can be applied for online, through Swoop Funding. Business loans can be for purposes, including starting a business, expanding an existing business, business acquisition, importing and exporting. Other types of financing include equipment financing, equipment leasing, and working capital.
