What is Trade Finance?
Every business needs to manage its working capital and maintain a healthy cash flow to succeed. For this, it needs a regular flow of money. Sometimes these finances are provided by banks or financial institutions.
However, there are several limitations to using traditional banks or institutions, such as:
a) Banks are highly regulated, and thus a customer needs to go through extensive scrutiny and paperwork.
b) Banks charge a high amount of interest from businesses.
c) Banks hardly provide these services to SMEs (Small and Medium Enterprises).
Trade Finance is a bundle of services to make trade transactions more feasible. Therefore, Trade Finance companies connect investors with these SMEs and create a win-win situation for all the stakeholders (i.e., SMEs and Investors).
Trade Finance includes a wide array of services such as:
Factoring / Invoice Financing.
Letter of Credit.
Bridging.
Stock Finance, etc.
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