International Trade Financing

Trade Finance – At the Forefront of Capstone Capital.

Trade finance accounts for 3% of global trade, worth some $3tn annually. Simply put, it’s the financing of trade in a company life cycle, whether you’re sending goods, services or commodities, a variety of financial instruments are used to structure this, under the umbrella term ‘trade finance’. Trade finance includes Letters of Credit (LCs), export finance and credit agencies, receivables and invoice finance, as well as bank guarantees. There’s often a lot of confusion in definitions, so we’ve put together a guide on how companies can use these instruments in conjunction to finance trade flows.

How can we help with trade finance?

Capstone Capital team work with banks, funds and alternative financiers across multiple geographies and jurisdictions to help companies access finance fast. We have product specialists, who work collaboratively help companies grow their trade lines both international and domestically.

Our team of experts are agnostic of finance product types and will look at numerous financing options to help find the best solutions to help you grow your trade flows. From vanilla trade finance facilities or export finance products rights through to complex cross border commodity trade, our 34/7 team are here to help you grow.

We’re often regarded as a CFO or FD, as opposed to an originator or broker of trade finance. We know you are busy running the business, and our dedicated account managers work round the clock to help place you with financing structures as quickly as possible. We are your partners in trade and work with the majority of funders in most jurisdictions around the world.

At Capstone Capital, we know who the decision makers are, the key influencers and managers at bank, financial institutions and funds, so it’s often easier and faster to get to the right person quickly and speed up your application. All at no cost to you.

We are 100% Independent and Impartial: Working only for our businesses.

Capstone Capital have no ties with any one lender, so can be flexible at offering the product that is right for our clients, not an off the shelf product that inhibits growth or limits opportunities for your business, no matter how complex. Often the financing solution that is required can be complex, and our job is to help you find the most appropriate trade finance solutions for your business.

Trade financing includes:

  • Lending facilities
  • Issuing Letters of Credit(LCs)
  • Export factoring (companies receive funds against invoices or accounts receivable)
  • Forfaiting (purchasing the receivables or traded goods from an exporter)
  • Export credits (to reduce risks to funders when providing trade or supply chain finance)
  • Insurance (during delivery and shipping, also covers currency risk and exposure)

Why is trade financing important?

Trade financing (also known as supply chain and export finance) is a huge driver of economic development and helps maintain the flow of credit in supply chains. It is predicted that 80-90% of global trade is reliant on trade and supply chain finance, and is estimated to be worth around USD $10 trillion a year. As a result of the global economic crisis in 2008, export markets reduced in size by around 40-50%, SMEs being the hardest hit. As a result, lending decreased as investor’s appetite for risk decreased, and banks had to reduce the sizes of their loan books.

Who benefits from trade finance?

Export finance has many beneficiaries: developing countries, governments, small and medium enterprises. SMEs are engines for economic growth and development, accounting for around 99% of businesses, 50% of employment and driving around 30% of private sector revenue in the UK.

In relation to export finance and the supply chain, many SMEs play a large role in the running of multinational corporations and larger companies. SMEs require access to finance to fulfil larger contracts, import goods from overseas and create wealth, jobs and develop economies.

The Benefits of Trade Finance at Capstone Capital

  • Facilitates the growth of a business
Cash and working capital are key to the success of any business. Trade finance often helps make a company’s goods and receivables work for them, freeing up and releasing working capital that is tied in stock. Why does this help? You can suddenly offer more competitive terms to win your next business, not be tied by late payment or lengthy delays between shipping an order and receiving payment, which is ultimately good for growth and benefits your customers. Trade finance is a form of short to medium term working capital solution which uses security of the stock or goods being exported/imported as a guarantee.
  • Increased revenue potential/ Higher margins

Trade finance allows buyers to request higher volumes of stock or bigger orders from suppliers, meaning businesses can easily benefit from economies of scale and bulk discounts off volumes. The margin benefit of using trade finance to grow a business can help win competition and increase revenue. Trade finance can also help strengthen the relationship between buyers and sellers, increasing profit margins and profits.

  • More efficiency in trades and supply chain

Managing the supply chain is so important for any business. Trade and supply chain finance helps ease out cash constraints or cash gap, whether it is suppliers, customers, third parties, employees or providers, trade finance can help ease and release working capital from the supply chain.

 

  • Mitigate risk from suppliers

Trade financing reduces credit and payment risks of bad debt risk on suppliers as the funders take hold over the goods being traded. Trade financing focuses more on the trade than the underlying borrower (not balance sheet led), so small businesses with small balance sheet can trade larger volumes more easily and work with larger end customers.

  • Diversify your supplier network

Working with other international players allows business owners to diversify their supplier network which increases competition and drives efficiency in markets and supply chains.

  • Reduces bankruptcy risks

Late payments from debtors, bad debts, excess stock and demanding creditors can have detrimental effects on a business. External financing or revolving credit facilities can ease this pressure and prevent an SME from facing these risks.

Reaching The Stars For Our Clients