Trade finance is the set of instruments that lets a business move goods before it has been paid for them. Used well, it converts a working-capital gap into a manageable, financed cycle. Here are the instruments we arrange most often, and what each is for.
Spot credit
A short-term advance against a specific, identifiable need: a shipment, a tax payment or a supplier settlement. It is fast and flexible, and it is repaid as the underlying transaction completes. Spot lines suit businesses with a clear, recurring conversion cycle: distribution, logistics and commodity flows.
Letters of credit
A letter of credit substitutes the bank’s promise to pay for the buyer’s. The supplier ships against the certainty of a bank undertaking rather than the buyer’s balance sheet. This is the instrument of choice when a counterparty is new, cross-border, or simply needs the comfort of a first-tier institution standing behind the payment.
Confirming lines
A confirming line lets a buyer extend payment terms to suppliers while the supplier is paid promptly by the bank. It smooths the cash cycle on both sides of a trade and is well suited to companies managing a network of recurring suppliers.
Choosing the right instrument
The instrument is a means, not the point. The right structure starts from the client’s cash cycle, how quickly inventory and receivables turn into cash, and works backwards to the sizing, terms and bank that fit. Arranged properly, trade finance is not debt for its own sake; it is the mechanism that lets a sound business trade at the scale it has earned.