Trade Finance

No Upfront Payment

Trade finance is the financing of international trade flows. It exists to mitigate, or reduce, the risks involved in an international trade transaction. There are two players in a trade transaction: (party 1) an exporter, who requires payment for their goods or services, and (party 2) an importer who wants to make sure they are paying for the correct quality and quantity of goods.

Smaller businesses often have very limited access to loans and other forms of interim financing to cover the cost of goods they plan to buy or sell. Even with a confirmed order for products, many banks won’t provide loans or overdraft protection for these types of transactions.

Business owners, both small and large, don’t want to have their own money tied up in shipments of goods that could, for example, take four to six weeks or more to arrive from an overseas manufacturer.

On the flip side, companies that export large amounts of goods can’t necessarily afford to wait until their export products have arrived at some distant destination weeks later, before receiving payment. Some sources estimate that over 82 percent of global trade depends on trade financing, which helps goods keep moving even when companies don’t have enough cash flow internally to finance the transactions themselves.

WHAT ARE THE RISKS?

As international trade takes place across borders, with companies that are unlikely to be familiar with one another, there are various risks to deal with. These include:

Payment risk: Will the exporter be paid in full and on time? Will the importer get the goods they wanted?

Country risk: A collection of risks associated with doing business with a foreign country, such as exchange rate risk, political risk, and sovereign risk. For example, a company may not like exporting goods to certain countries because of the political situation, a deteriorating economy, the lack of legal structures, etc.

Corporate risk: The risks associated with the company (exporter/importer): what is their credit rating? Do they have a history of non-payment?

To reduce these risks, banks and other financiers have stepped in to provide trade finance products.

Types Of Trade Finance Products;

• Letter of credit
• Supply chain finance
• Export and agency finance
• Structured trade and commodity finance
• Trade credit and political risk insurance

What does Harley Pacific Investments do for commodity traders?

When your business is growing rapidly and becoming more international, your financing needs will increase and you will face new risks. We offer a range of trade finance services designed to help you finance growth and manage new risks efficiently.

We provide various types of facilities that allow buyers/traders to fund their trades.  Our front end financing includes the following:

• Credit Finance
• Pay Suppliers Direct
• Letters of Credit
• Bank Guarantee / SBLC
• MT-799 POF
• Joint Venture

The financing is bespoke to the individual production, delivery and payment cycle of each trade. It can be for spot deals or revolving basis.

• Customer places order, sign a contract with the supplier
• We place the right financial instrument to pay the supplier
• We either provides a loan to buy, or makes payment to the supplier or provides guarantees such as a letter of credit or bank guarantee
• The supplier delivers the goods
• We release payment to the supplier
• Customer settles Harley Pacific Investments facility / the guarantee expires

Each trade is unique, so we cannot be too prescriptive in the criteria for such financing solutions. We are flexible and creative. We can structure a solution to meet your requirements.