As the world becomes one global village, international markets are increasingly becoming more available to organizations of all sizes. New supply sources in foreign markets, such as China and other Asian markets, create an opportunity for traders to source raw materials, finished products and services at a lower cost.
Many Kenyan traders are now sourcing their products from other markets and selling them for profit back home; and while globalized businesses offer many opportunities, financing the trade still remains an issue to many businessmen and women.
For a growing and developing business, cash flow and risk management is essential to successfully manage growth. As a business enters into the global market, it increases its exposure in new markets, meaning that the cash and risk concerns progressively require close monitoring.
For instance, a business that is encountering a quick rise in sales has an increased cost of sales and needs to source products to cater for the rising customer demand. This requires more cash to pay for the merchandise before the deal is made and the products released. In the event that that capital is to come from everyday income, you’re developing business risks coming up short of money to benefit the everyday operations and payables as they fall due.
The Trade Finance Solution
Trade Finance therefore comes in handy to fill this gap. Trade Finance involves a range of short term credit instruments and facilities which are organized in a way that matches the exchange cycle of the import or export program of an international business. It exists particularly to help with risk management, cash flow management and the arranging of income required to benefit the everyday running of an international business. Trade Finance instruments can even be issued in any currency, either matching the supplier’s terms or the buyer’s payment.
On the off chance that you are seeking a trade finance expert with a bank, then you are on the right track. Trade finance experts help with advice around things like terms of exchange, the market you are entering or sourcing, both parties’ due diligence and the outline of a structure to coordinate your business’ exchange cycle.