TRADE SERVICES

GTIB UK provides Global trade support services to corporate and professional clientele where there is a demand to support a Trade with a backup of a Letter of Credit(LC) , Standby Letter of Credit (SBLC) or a in certain cases a Bank Guarantee (BG). 

In its simplest form, an exporter requires an importer to prepay for goods shipped. The importer naturally wants to reduce risk by asking the exporter to document that the goods have been shipped. The importer’s bank assists by providing a letter of credit to the exporter (or the exporter's bank) providing for payment upon presentation of certain documents, such as a bill of lading.

The exporter's bank may make a loan to the exporter on the basis of the export contract. The type of document used in the process depends on the nature of the transaction and how evidence of performance can be shown (i.e. bill of lading to show shipment). It is useful to note that banks only deal with documents and not the actual goods, services or performance to which the documents may be relating to.

Trade finance is used when financing is required by buyers and sellers to assist them with the trade cycle funding gap. Buyers and sellers can also choose to use trade finance as a form of risk mitigation. For this to be effective the financier requires:

  •    Control of the use of funds
  •    Control of the goods and the source of repayment
  •    Visibility and monitoring over the trade cycle through the transaction
  •    Security over the goods and receivables

Trade finance helps settle the conflicting needs of the exporter and the importer. An exporter needs to mitigate the payment risk from the importer and it would be in their benefit to accelerate the receivables. On the other hand the importer wants to mitigate the supply risk from the exporter and it would be in their benefit to receive extended credit on their payment.

The function of trade finance is to act as a third-party to remove the payment risk and the supply risk, whilst providing the exporter with accelerated receivables and the importer with extended credit.