Any business that imports goods will be familiar with this trade cycle:

The trade finance cycle

As SMEs move into a new year and attempt to shake off the impact of the pandemic, whilst  also dealing with the imminent uncertainty of Brexit, the ability to access the right type of funding to support their business cash flow needs is going to be more critical than ever.

An area that is often overlooked is Trade Finance; a well-structured facility that can relieve the cash pressure that exists at the front end of a trading cycle. 

If a supplier is unwilling to provide credit terms to a UK-based SME business, but there is a clear need to purchase the goods or the stock in question, a trade finance provider can fill this gap. They provide what is effectively a short-term bridge that will see the supplier paid, the goods shipped and received into the UK, followed by the sale of the goods which then repays the initial lend – effectively a self-liquidating and revolving credit facility.

Therefore, trade finance is an excellent solution that should be considered by SMEs who need to purchase goods for onward sale. These businesses should hopefully be putting their forecasts together now and planning their working capital requirements. 

In some cases, many SME businesses will be entering 2021 with a weaker balance sheet than they came into 2020 with and may therefore find credit facilities to be a little more difficult to obtain.

A key attribute with a trade finance facility is the fact that the transactions themselves form a significant part of the underwriting process, thus a weaker balance sheet is not necessarily a barrier to obtaining a facility. Similarly, as SMEs look to grow again next year, which will bring its own funding headaches for all the right reasons, it will be important that they can access the funding they will require to ensure their customer orders can be fulfilled.

A WeDo Trade Finance facility can be used to purchase finished goods from a supplier, whether they are based overseas or in the UK, where those goods are either already pre-sold against a forward order book or are regular selling lines where stock needs to be replenished to ensure future demand can be serviced.

So, if you know of an SME business who are unable to obtain credit from their supplier in order to purchase the goods they need to service their customers, a trade finance facility may be the most suitable solution. 

WeDo Trade Finance can fund up to 100% of the landed cost of the goods, thus taking the cash headache away and ensuring customer orders can be fulfilled.

If you think we can help please contact us on 0330 900 5000

Let’s talk

We’re ready to put our money where our mouth is. Talk to us about a specific service we offer or tell us your challenges, and we’ll find the best ways to help.