When exploring your business finance options in Australia, you will come across an extensive portfolio of loan products. What suits your business will depend on your specific financial requirement, your creditworthiness, the kind of business you own, and your preference in loan terms and rates. On that note, this blog will answer the frequently asked questions about trade finance in Australia, which is one of the most preferred financing options for enterprises struggling to meet their working capital needs. Hopefully, you will find some insight within the Q&As.
Trade finance is highly beneficial for business owners who source their raw materials from overseas and sell their finished products to Australian companies. It’s a form of financing solution that enables the business owners to pay the suppliers for inventory, raw materials, or stock upfront so that there is no delay in the production and distribution of new orders. Trade finance eliminates the need to tap into the working capital to mitigate the cash-flow deficit for 180 days. It enhances the purchasing power of an enterprise, both on the domestic ground and internationally.
In the financing world, trade finance is often considered a form of working capital. It is for financing cross-border transactions. If you are an importer, you receive the loan amount to pay your supplier, buy time to receive the goods, sell your products, and earn cash.
If you are an exporter, then the trade finance offers you a buffer time until you receive payments from your overseas customer for the delivered goods and services.
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You must remember that trade finance is not your typical financing solution, and it is not for all kinds of businesses. It is short-term funding, enabling the business owner or the manufacturer and the supplier to streamline their payment cycle without depleting the cash reserves.
When seeking trade finance in Australia to mitigate your business cash flow and working capital needs, you can either get help from a finance broker or find a lender yourself. In either case, you must check the reputation of the loan professional because that’s how you get the best loan terms and favourable rates. The benefit of going to a finance broker is that you will not have to search for a lender yourself. The broker takes care of that by matching you with the right financing solution.
Saroj is the Head of Lending at Broc Finance. He comes with 13+ years of experience in small business lending and has a knack of structuring complex deals and get the best outcome for his customers.
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