Trade finance is related to international trade, thus involvement of an exporter (the seller) and an importer (the buyer). The buyer wants to receive goods on credit and considering the parties reside in different countries this pose default and cash flow problem for the seller and steps must be taken to reduce payment risk. The buyer too is not prepared to prepay on foreign purchases without physical delivery as this has inherent delivery failure risk.
A financing firm preferably a bank is approached by the buyer to guarantee payment to the seller if certain conditions are met. The guarantee (called a letter of credit) is effectively a loan to the buyer based on export contract. The bank will make payment to the seller’s bank if certain documentation (bill of lading) offering infallible proof that the products have been shipped is presented to the bank.
PMCT Accountants and Consultants are well trained with many years in international trading exposure and coupled with our product knowledge and experience we are in at an advantageous position to assist you accomplished objectives. We are prepared to advise and assist you with processing of any part of your trade finance transaction cycle.
Please contact us to discuss your trade finance requirements.
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