Import trade finance products

Import trade finance products

After a quick online search you’d be forgiven for believing that either there are very few import trade finance products available, or that to qualify, you need a confirmed UK order against which you can invoice following delivery.

Neither is true and in fact there are many trade finance providers and solutions but you need to understand your business needs first in order to search for the right import trade finance solution.

Import trade finance products are “simply” standard commercial finance products which are suitable for import businesses “as is” or have been optimised from their standard UK form to suit international trade.

Import trade finance products – 4 main types:

The types of import finance fall into 4 main categories:

There are also two sub-categories:

  • Purchase order, (“PO”), finance: Loan against a confirmed UK Customer order. Often tied to a Factoring solution to form a complete supply chain finance package
  • Bridging finance: No not for property! Used to finance the import of equipment or machinery as Asset finance cannot be used until the item(s) is physically in the UK

A trade finance product chosen correctly can:

  • Provide up to 210 days of finance before any repayments
  • Improve gross profit
  • Improve your ability to negotiate better price, volume discount, payment terms and credit with an overseas supplier
  • Reduce the amount of working capital required and avoid potential cash flow issues

So, if you import goods, components, commodities, services, equipment or machinery into the UK and think you might require finance support now, or in the future, continue reading.

We’ll cover everything you need to know about import trade finance products below…….

Import trade finance products – what to do first:

Before searching for any type of import trade finance consider and decide:

  • How long do you need the finance for? ( A useful guide is short term, 1-4 months, or longer term 4+ months)
  • Will the finance be used to fund just the deposit, full purchase price or full UK landed & delivered cost, (purchase price + shipping, import duty, VAT and customs clearance)?
  • Are you willing and/or able to offer security for the trade finance required?
  • How much will your company contribute to the import purchase?
  • Do you have, or can you get, orders for some or all of the imported goods?

Answering those questions will quickly indicate which of the four main import trade finance products are available, and importantly suitable, for your import Business.

Import trade finance products – Handy solutions summary

Not all types of import trade finance are suitable for all types of import or importer.

If you’re short of time the following table provides a handy review:

 

Import Type Revolving credit facility Business loan Asset Finance Invoice finance / Factoring
Finished goods Yes Yes No Yes
Unfinished goods Possibly Yes No Yes
Components Possibly Yes No Yes
Commodities No Yes No Yes
Perishables No Yes No Yes
Equipment Yes Yes Yes Yes
Machinery Yes Yes Yes Yes

Click any of the table headings to access more detailed information on each import finance solution.

Import trade finance products – What the lenders want:

The purpose of any business finance it to make BOTH parties a profit.

Accepting that any lender, whether a Bank or alternative commercial finance provider, only lends to businesses they consider an acceptable risk will alter your approach to any finance Application.

Being prepared is the key to a successful Application for any of the import trade finance products mentioned.

This fact is supported by recent press articles which cite lack of preparation and understanding of basic business measures, (cash flow & affordability), as primary reasons:

So you don’t become one of those press statistics, below is a list of the initial questions any prospective lender will want answers to:

  • What import goods will be financed?
  • How much finance do you require? (Note“about £x,000” will not be good enough)
  • What’s your experience of your Business and its trade?
  • Last year Accounts, were they profitable?
  • Business bank account. Is it in credit or often overdrawn?
  • Any credit issues against the Business or Director(s)? (Be truthful from the outset. It takes a lender only minutes to check credit reference agency reports. Failure to disclose is viewed negatively)
  • What existing finance does the Business have?

As mentioned previously import trade finance products are standard commercial finance products that are either optimised with terms and a service package, or joined together into a package of products suitable for import trade.

So you approach an Application for them in exactly the same way as you’d apply for any type of business finance.

Here are two articles with checklists to help your preparation:

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Import trade finance products – more help & information:

Our Firm specialises in supporting importers and financing imports of any type & value.

In fact we are the only independent, whole of market commercial finance brokerage in the UK dedicated to offering import trade finance products, support and advice.

If you don’t feel confident, or simply don’t have the time to analyse your Business, decide with type of trade finance is right for your type of imports & trade or prepare the Applications, we can help you:

  1. Decide if & which import trade finance products you’re eligible for; (free, no obligation service);
  2. Compile, submit and deal with all Applications to suitable commercial finance lenders; (fixed fee) and
  3. Secure and implement the approved import trade finance solution which we guarantee will be….
    • Of the right type;
    • At the right price;
    • On the right terms

Discover which import trade finance products are right for your business?

Book a FREE, NO OBLIGATION call with one of our Trade specialists. They’ll analyse your trade and advise which, of the many solutions available, is right for you.

Contact:

We hope you have found this review of the import trade finance products available to UK importers useful.

If you think it would be a solution for your Business now, or in the future, please book an informal, no obligation, discussion regarding your Business, ambitions, the proposed trade and your unique circumstances.

Alternatively if you have any questions please use the contact form below.

Either way we’d love to hear from you.

Discover which import trade finance products are right for your business?

Book a FREE, NO OBLIGATION call with one of our Trade specialists. They’ll analyse your trade and advise which, of the many solutions available, is right for you.

Importing is your Business, financing it is ours.

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Based in the Midlands, UK. Serving Businesses nationally & internationally.