Trade Finance Companies – Know the Facts
February 27, 2020
The term "trade finance" refers to the arsenal of financial tools and resources that are used by individuals and organizations to facilitate trade. These tools make business transactions easier, especially between foreign parties. Trade finance companies are facilities that issue these financial products. They support small businesses as well as multinational organizations that are involved in domestic and international trade. Import and export transactions are made a lot safer and faster.
If you're looking for a good trade finance company in Dubai, you should check out Credico Capital. They are trusted providers of financial instruments, and their rates are fair. They specialize in matters of international trade. Without further ado, here are some important facts about trade finance companies:
They Offer A Variety of Financial Services
Trade finance companies offer numerous services that can be customized to suit the specific needs and requirements of their clients. Some of these tools include LC and bank guarantee. These companies are well equipped and funded to take on different business transactions (within reason). Also, they cover activities such as forfaiting and issuing other forms of guarantees or contracts. Trade finance companies serve as middlemen between buyers and sellers.
They Undertake Most of The Risks Involved
There are several risks involved in trade, especially international trade. What happens if the buyer doesn't complete the payment? What if the seller fails to deliver? Several things could go wrong and hurt the parties involved. Trade companies help reduce the risks associated with a business transaction by forming a contract that ensures that certain things are put in place before they can proceed. They also act as guarantors and ensure that, no matter what, the "victim" is compensated.
Trade finance companies help improve the credibility of buyers and sellers, making it easier for them to make new connections and expand their business. For instance, a buyer with an LC will be seen as trustworthy because it means the lending institution approved of his financial record.
The Option of Forfeiting
This concept or agreement is offered by trade finance companies. Forfaiting involves the seller giving his debts to a forfeiter at a discounted price in exchange for money. As a result, the seller's debt is transferred to a forfeiter.
This is another service that trade finance companies offer. It is a type of contract that involves the exporter selling all his open transactions or invoices to a financier at a discount. It is an excellent way for exporters to improve their working capital and cash flow.
Visit us where you’ll find a variety of services to choose from when opting for a trade finance company.