Funding the gap.
WHAT THE PROBLEM IS
Money leaves before goods arrive and long before they are sold.
WHAT THAT PRODUCES
A cash gap that grows with volume.
WHAT INSTRUMENTS EXIST
Documentary credits Import finance facilities Invoice financing, for exporters Credit insurance Supplier credit
WHAT AN IMPORT FACILITY PROVIDES
Funding to pay the supplier, repaid after you sell.
WHAT IT REQUIRES
Banking relationship Security, frequently Documentation
WHAT INVOICE FINANCING PROVIDES
Advance against amounts owed by customers.
WHAT IT COSTS
A charge on the amount advanced.
WHAT CREDIT INSURANCE PROVIDES
Protection against a buyer failing to pay.
WHO PROVIDES IT
Specialist insurers and, in some markets, export credit agencies.
WHAT SUPPLIER CREDIT PROVIDES
Time to pay, from the supplier.
HOW TO OBTAIN IT
A payment record, and asking.
WHY IT IS THE CHEAPEST
It costs nothing, if given.
WHAT TO CALCULATE BEFORE USING ANY FACILITY
The total cost against the margin on the goods.
WHY
Trade finance costs can consume thin margins entirely.
WHAT TO ESTABLISH
Your cash cycle: days from payment to receipt.
WHAT THAT DETERMINES
How much finance the volume requires.
WHAT TO AVOID
Growing import volume faster than your ability to fund it.
