How To Use Trade Finance When Your Stock is Not Pre-sold

 In Inside AR Cash Flow, Port to Port Finance, Trade & Inventory Finance

Yes you can use Trade Finance when you have not pre-sold your stock!

How is this done?

Our next case study is a coffee importer, with a 150k facility

In this video you will learn;

  1. Why we financed this deal
  2. How we can make a Trade only facility ‘work’
  3. What’s required in a Port to Port only transaction

For an appointment with a Product Specialist call the office on 1300 652 158

By the end of this series you will have an insight into what we have learned about importing.

You will be armed with information we have obtained from the field.

Watch the video and/or read the transcript below

Julia:                Hi everyone. Julia from AR Cash Flow here. I’m back with this guy, Daniel.

Daniel:             Hi everyone.

Julia:                And we are again going to talk about another one of our real deals. Today we’re going to focus on a trade finance deal we did for a coffee importer, which was a $150K facility limit. And Daniel, let’s get the ball rolling. Tell us why we took this deal on.

Daniel:             This is a deal which is just purely a port-to-port transaction for us. So, although the client has pre-sold the commodity before it lands, we don’t really necessarily check all those pre-solds or audit those. So it’s really up to him, and we have no control over his debtors in making sure that his customers pay us. So with this product, it’s a commodity that attracts us to port-to-port products. So being coffee, it’s obviously a commodity. It’s pre-sold mostly but not confirmed, and he has a 30% GP margin, which is quite good actually because it’s a special type of coffee. So yeah, we like that, and that’s very attractive, and also he’s a good guy.

Julia:                Oh excellent. Nothing better than a good guy.

Daniel:             Nothing better.

Julia:                Or girl.

Daniel:             Or girl.

Julia:                And what was the challenge? Did something go wrong?

Daniel:             No, nothing has really gone wrong with this type of deal.

Julia:                Okay.

Daniel:             We have a few of these types of clients. The main thing I want to point out here is that, even though he does have a debtor finance facility in place, you don’t necessarily have to use it.

Julia:                Right.

Daniel:             But if you’re not using the debtor finance facility yet, we can only really fund it to the port. So if it’s pre-sold, we’ll allow it to go to your customers, and they can pay us direct. If it’s not pre-sold, you have to pay us out before we release the goods to you here in Australia.

Julia:                Okay. I thought you had to have debtor finance with trade finance.

Daniel:             You do have to have the facility in place, but you don’t have to use it.

Julia:                Don’t have to use it. Okay.

Daniel:             But at least you have the flexibility if you need it.

Julia:                Yeah, absolutely. Excellent. Great. Thanks Daniel. Call the office on the 1300 number and book an appointment with a product specialist to discuss your real deal. Thanks for watching guys.

Daniel:             Thanks for watching.



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