Trade finance solves the most common trade dilemma. When engaging in the sale and purchase of goods and services, especially at an international level, sellers demand payment before shipping their goods. In contrast, buyers want to only pay when they receive the goods. This uncertainty around payment and receipt of goods is an inherent risk associated with trade. Trade finance resolves the uncertainty by bridging the gap between working capital cash flows.
By financing the trade cycle at various points in the transaction, trade finance precisely reconciles the buyer’s and seller’s needs. It also enhances participants management of the capital required for trade, while mitigating or reducing the risks involved in an international trade deal. It is an essential part of the global economy. Some 80% to 90% of world trade relies on trade finance. (ref: www.itfa.org)
Benefits of Trade Finance
- Timely or upfront payments to your suppliers could enable you to receive early settlement discounts and buy in larger quantities, giving your business a competitive advantage, affording greater economies of scale and bulk discounts;
- Access to trade finance facilities will enable your business to expand seamlessly, providing peace of mind that as sales begin to increase, funds will be available to secure stock and meet client demand;
- Trade finance provides you with the benefit of additional finance without diluting the ownership of your business;
- Repayment terms with the funder are negotiated according to each business’s working capital cycle, with the intention to normalise the cash-out and cash-in cycle and alleviate the pressure on your cash flow.
Ziegler Trade Finance
Ziegler South Africa is a trusted provider of trade finance. We understand the critical role that trade finance plays in our client’s businesses and the South African economy. We are dedicated to supporting our clients and helping them grow their business by leveraging our financing facility, ultimately assisting them to better manage their cash flow, and step up their import volumes.
Our trade finance facility will allow you to manage both the physical and financial elements in the supply chain process from start to finish, without you having to outlay any funds for the transaction. This will benefit your working capital cycle by funding your operating cycle, i.e. from the time payment is made to your overseas supplier until receipt of the funds from your customer.