Trade & Stock Finance
Trade and stock finance facilities are designed to help companies purchase the stock they need to trade. Trade finance refers to the fulfilment of a specific order and tends to work on a transactional basis.
The finance company will assess the cost of bringing goods in versus the sale price of the goods. They will then typically advance cash for payments to suppliers to be made and be repaid via the sale of the goods. Trade finance facilities are often used to pay overseas suppliers, and often involve paying deposits, final balances, and shipping costs.
Stock finance refers to situations where a business is bringing in goods which will be stored in a warehouse and then sold over time. Your finance company will typically want the goods to be stored in a third-party warehouse and will require evidence of similar goods being sold in a timely fashion.
FAQ
Can I use factoring alongside my trade finance facility?
Yes, you can, and it is often preferred. Some lenders offer both facilities in house, whilst otherswill work alongside third parties. Doing this can add more comfort as the trade finance provider knows they will be repaid in a timely fashion.
What security will be needed?
Typically, a trade finance provider will require a debenture and personal guarantee.
Do I need established supplier relationships?
Trade and stock finance companies typically want to see an established track record with a supplier before they will pay them. If the supplier is new, they may ask you to pay the deposit.
What if I use my own warehouse?
This is often not allowed under a stock finance facility. However, it may be agreed if other security is available (such as a charge on a property) and regular stock checks may be required.
Can trade finance be used to pay overseas suppliers?
Yes. Most trade companies are used to paying overseas suppliers, typically in China
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