Answering the Common FAQs about Trade Finance in Australia

Financing is a vital ingredient for running a business. You can neither start a venture nor build it up and then develop and grow it along the way without sufficient capital backing. Big corporations in Australia have a significant market hold to acquire funds when in need. It is somewhat of a luxury for small business owners and people venturing fresh into the business domain. They have to rely on different business financing avenues to find their business. Business financing has diverse forms, with multiple clauses specific to the requirements of the respective borrowers. On that note, let’s explore the aspects of trade finance in Australia by answering the FAQs.

1. What is trade finance?

Trade finance is a form of financial product or instrument, which help businesses facilitate domestic and international trade. Also known as supplier finance, the trade finance limit allows businesses to pay their domestic and international suppliers in advance or upfront for receiving the essential goods on time. An enterprise can get its complete supplier invoice funded, with a time frame of up to 150 days to repay it to the lender.

The trade finance limit was designed for businesses dependent on domestic and international suppliers for their workflow. These enterprises constantly need cash to ensure a smooth supply chain and production management.

It allows businesses to be prompt in their timely payments, sometimes enabling them to clear payments ahead of time. On-time or advance payments give business owners the buying power, and they receive better prices, special offers and on-time delivery of supplies.

2. How does trade financing in Australia work?

To get trade finance limit for your business, you have to:

• Place an order for the supplies to your domestic or international supplier.
• Generate the order invoice and present the same to the lender.
• On approval, the lender sets the trade finance limit and dispenses you the amount.
• Once your production starts generating revenues, you can pay back the lender within the decided time frame.

3. What are the advantages of trade finance?

Having a trade finance limit comes with the following benefits:

• Access to easy funds without any collateral or security.
• Flexibility in repayment schedule and terms.
• Minimized FX, payment, and international trade transaction risks.
• Timely payment and timely supply of goods.

4. What documents are required to get trade financing?

You need the following documents to get approval for trade finance:

• Bank statement dating back 6-12 months.
• Management account documents.
• ATO statements.
• ID proof.
• Receivables ledger.

Conclusion

Hopefully, your queries regarding trade finance in Australia were answered. A small tip on a concluding note; getting trade finance in Australia through appropriate channels can be difficult if you seek it yourself. What can you do? Well, you can always reach out to a reputed finance broker for guidance and access to trade financing as per terms that are favourable for you and your business. With smooth facilitation of the supply chain through trade finance limits, your business will never suffer any financial setbacks for not paying the suppliers on time.