The Role Of Trade Finance

djamal-soft الأحد، 8 يونيو 2014
By Sally Delacruz


There are already lots of methods used in the business industry. Trade finance is one of them that helps importers and exporters to finance their business. It is just a simple method but a has a greater means for all international trades. For most offshore businesses, this is their chance to benefit from this financial support.

Dubai is located on the Southeast coast of the Persian Gulf and is one of the seven emirates that make up the country. Abu Dhabi and Dubai are the only two emirates to have veto power over critical matters of national importance in the legislature of the country. They also have trading offshore that provides several risks. This risk is sometimes for the importer. Once the payment is already made by the importer, chances are exporter pockets the money. Sometimes, importers also delays the shipment of goods. This is where the support for finance comes in.

Financial companies, are mostly offering letter of credits to each exporter made by an importer through banks. This is a credit letter that makes a sure payment for an exporter through a bank that provides the letter with proofs that the goods are already sent and shipped. For companies not utilizing this facility has made a great mistake that might affect the cash flow.

Sometimes, there are confusions of the right time to utilize a trade support. This is beneficial for all import and export companies in a country. It also provides a certain profit for every offshore business. Sometimes, it is because of the cash flow that gives a hesitation for a company.

This situation can be answered by any bank managers. For importers, a finance for trading is a support for their cash flow of purchasing and sale goods. For exporters, it is a great solution for their shipment process and financing in the manufacturing method.

It is beneficial to reduce the trading, administrative and currency risks in the international market. It is a great support for paperwork importation and administration or for letter of credits importations. It has also the capacity to maximize the turnover without threatening the cash flow. This facility is highly available for most importers and exporters for pre and post shipment process.

It is sometimes complicated for others, but the truth is, it just simple. There are some structures that looks complex, especially in the financing, but it is still best to require a good deal for both parties involved in the entire process. This is why, the amount of loan is high to authorize a higher paid adviser, lawyer and banker.

Due to its simplicity and flexibility, there is a clear overview of every business transaction that is made by most individuals. It is good for monitoring an individual transaction, either transaction from the start up to the last minute of the transaction.. The data can be easily transferred to any spreadsheets for the system to be used again. This is better to reduce the risk of errors.

It has the benefit of a settlement for any discounts from a supplier. It can help for the consolidation of the orders that are obtained for a better shipping rate price for the improvement of bulk prices. It enables to avoid the need to change a commercial banking relationship if this facility is obtained.




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