What are the advantages of Import Finance?
By utilising import finance, businesses can negotiate better terms with suppliers, such as favourable pricing, extended payment terms, or discounts for early payments. This can enhance the company’s competitiveness by allowing access to better pricing and more favourable trade terms.
Access to Global Markets
Import finance enables businesses to expand their reach and access global markets by facilitating trade with international suppliers. It provides the financial tools necessary to engage in cross-border transactions and take advantage of sourcing opportunities from different countries.
Working Capital Support
Import finance provides businesses with the necessary working capital to fund the purchase of goods from international suppliers. It helps bridge the cash flow gap between the payment to suppliers and the receipt of payment from customers, ensuring a smooth flow of operations. This helps in managing cash flow fluctuations and reducing the need for short-term borrowing or reliance on internal working capital.
Import finance instruments such as letters of credit and documentary collections offer risk mitigation benefits. Letters of credit provide a guarantee of payment to the exporter, ensuring that the importer will only pay when the agreed-upon conditions are met. Documentary collections provide a secure method of payment by involving banks to handle the transfer of funds and shipping documents.