Trade Finance is a service designed for the growing business. It enables a business to increase its working capital by funding the operating cycle, i.e. from the time payment is made to a supplier until receipt of funds from customers, thereby leaving internal funds free for other uses.

Trade Finance is usually provided to companies which are profitable and ready to expand, but have no additional funds available. Subject to pre-arranged terms, Merchant Factors would make payment to overseas and/or local suppliers by way of either a Letter Of Credit or Direct Payment and, in most cases, offer the credit period needed before recouping money from customers.

Any cash discounts obtained from suppliers would be for the company's benefit.

How does the arrangement work?

The relevant details are provided to Merchant Factors regarding payment to the supplier. Merchant Factors will then establish a Letter Of Credit or arrange for payment to be made directly to the supplier.

Where foreign currency is required for the settlement of overseas purchases, Merchant Factors purchase foreign currency at the forward rate when the order is placed. Credit terms of up to 180 days after shipment are allowed subject to no more than 120 days credit from Merchant Factors. Repayment is normally made by Bills of Exchange accepted by the company.

What are the benefits?

• Increase in sales and profits
• Development of new product lines
• Purchasing advantages by being able to buy in larger quantities
• Discounts on purchases through prompt payments to suppliers (Discounts, together with the increase in profits, should more than offset Merchant Factor's charges)
• Funds for special opportunities, emergencies and seasonal peaks (Costs are only incurred when the facility is being used)
• A more competitive position for you in the market place
• Improved standing of your business with suppliers and customers
• Reduction of pressure on your current banking facilities

• As Merchant Factors shall, in effect, become your "partner", you will have the additional advantage of Merchant Factor's expertise, which will assist in the smooth operation of your company

What will the Cost be?

Service fee:

A service fee is levied which covers charges for administration relating to payments made to your suppliers. This charge is dependent on requirements and can vary between 2.5% and 3.5%.

Interest charge:

An interest charge is calculated from the day funds are outlaid until repayment is made into our bank account. This rate is similar to overdraft rates being charged by commercial banks. (usually Prime +1% or +2%)