The ability to finance international imports and exports is one of the three keys to success in successful world trade. Besides finance capability, an entrepreneur needs two other prerequisites to be able to deal profitably: reliable suppliers, and creditworthy end-buyers. If any one of these is missing, there's either no deal, or worse, a disaster.
Although we focus on trade finance, we do so knowing that finance is only one piece of the ultimate solution. Too often we see deals where the client has a reliable buyer, or a reliable supplier, but where two parts of a successful trade deal are still missing. And we also see cases where entrepreneurs try to put deals together without proper preparation.
When we work with our clients, we keep the bigger picture in mind. After all, the finance piece alone won't help our clients if the deal itself is suspect.
Financing Options and Strategies
The right kind of financing can help your business grow more quickly and profitably. You can use your own money as far as it goes, or you can use other people's money. If you take the time to find out what your financial choices are, you can make your company much more profitable.
If your existing capital allows you only four inventory turns per year, but you have demand for more, you need a way to satisfy that demand. You need to know how you can gain access to additional capital. Different capital strategies apply to different businesses, but every dollar of capital you have in your business can be multiplied from 3 to 25 times if you let us help plan your strategy. To be perfectly clear: $100,000 of capital will allow you to handle up to $2,500,000 of business orders.............depending on the situation.
There are two big questions you will probably ask yourself:
1. Where will the money come from?
A lot of lenders are hiding under their desks these days. But money is still available. And we know where it is.
2. Once I've got access to the money, how am I going to use it most effectively?
This is where you assess your profit margins versus the cost of capital. Funders generally secure their capital based on either your business assets, your orders, or your receivables. We will work with you to find the most effective way to get access to the capital you need and assess the best strategies for your business.
Access to Capital = Success
Letters of Credit
We work with Letters of Credit of varying types, like documentary or standby letters of credit. In particular, we can supply Documentary Letters of Credit (DLC's) which do not require you to provide collateral. You might think of them as port-to-port financing in global trade. They are of particular value to importers whose existing credit lines are too small to handle their existing business. Through such LC's we can help your available capital go much, much farther.
Standby Letters of Credit (SBLC's) are used for some commodity or real estate transactions.
If you are a middleman and need to keep your buyer and supplier separate from each other, you will probably need a back to back LC, or a transfer LC.
Lately, we have seen particular demand for LC's from gold importers. This makes sense, considering that gold is viewed as a store of value in a financially uncertain world.
Asset-based finance for corporate clients
Companies have a number of ways to smooth out their cash issues when they are dealing with finished goods. These include accounts receivable financing, invoice factoring, purchase order funding or asset based lending. Perhaps we can help you co-ordinate between domestic asset-based finance and global trade finance opportunities. Or we can solve knotty funding problems.
Accounts receivable (A/R) finance allows you to get immediate cash from your invoices to credit-worthy customers. You increase your turnover and profits, and your funder manages the credit issues, removing a further headache from your business, and sometimes, an early warning of customer credit problems.
Purchase order (P/O) funding is another highly effective financial tool for a savvy trading company. Let's say that you know where to fulfill a high-margin order for your credit worthy customer, but you don't have the cash. You miss the business, and your competitor does the deal. Maybe your competitor just had a P/O funder, and here's what happened on the $1 million order (with 20% margins) from the well-known store chain: your competitor's funder paid $700,000 to the supplier, the competitor funded the other $100,000, and the deal was done, with a $200,000 profit before finance fees. It could have been you. With our help, next time, it will be.
The Scrap Metal Industry: A Special Finance Opportunity
We see an increasing number of experienced scrap professionals who seek effective finance of their deals, and whose end buyers are providing a letter of credit to secure payment.
However, some scrapyard owners don't accept letters of credit, making financing difficult. We have devoted a special page, Scrap Metal Finance, to the solutions to this problem.