Import finance is a valuable source of finance for importers who are importing against confirmed orders from their customers. Import finance is typically a combination of trade finance and invoice finance which when combined allows you to fund the full trade cycle.
Import finance can allow you to take advantage of large orders that you may otherwise have to walk away from. The trade finance element provides a letter of credit to your supplier. This guarantees them payment as long as they ship the correct goods to the correct place. This allows you to deliver the goods and raise an invoice. Once this invoice is raised the invoice finance facility kicks in and repays the trade finance facility. Once your customer pays the invoice finance facility is repaid and the full trade cycle has been funded from the customer order right through to the customer payment.
Typically the basic criteria for import finance are:
- A confirmed order from a credit worthy customer
- You will typically invoice this customer on credit terms
- A 20% gross margin on the goods is typically required
- The customer will be another business
- The invoice will be raised in arrears of delivery
If you are looking to explore your import finance options contact us today.
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