Why Can’t You Approve The Deal And Hand The Money Over To Me And I Will Pay My Supplier?
In a Trade Finance facility it is crucial that the financier be involved in the transaction from start to finish.
This includes the vital step of paying your supplier directly.
The financier wants to confirm the funds they are providing are being used in the correct capacity for which they were originally agreed upon. This is a sure way to minimise any risk of funds being used incorrectly.
Further to this, it also reduces risk for the financier of having a third party claim against the goods. For example; if the client ceases to trade, the financier wants to guarantee title to the goods. At least then the financier can complete the order on behalf of the client and collect out their money.
Paying your supplier directly is safer for the financier and the client as they can also use legally binding documents to claim the goods, something a client may over look and not be aware of if they take the payment upon themselves.