(Newswire.net — October 24, 2019) — Payment is one of the important aspects of international business. During the initial periods of international trade, most of the exporters were not sure about whether the importer will make the payment or not for their goods and services as said above. On the other hand, importers were also worried about making prior payments since they have no guarantee whether the exporter will ship the goods or not. This made both the importers and exporters to think about the best ways to reduce the risks involved in the business.
Reduces payment risks
Trade finance evolved as the best solution to address these issues and its role is to act as a third party in removing the risks related to payments. Some of the common providers of this finance include syndicates, banks, trade finance houses, suppliers and buyers. This helps you engage in expert import business without the usual risks of payment. This reduced the risks by proceeding the payment for exporters and assuring the importers that the goods have been shipped through necessary documents. The process is handled by any of the above said providers through different finance including invoice finance, purchase order finance, pre-export finance, supply chain finance, letter of credit finance, project finance and more.
Reduce pressure on both exporters and importers
Now they have a middleman to assure safe payments for both buyers and sellers in the form of trade finance. This bridges the financial gap between exporters and importers. Trade financier verifies the export data and makes the payment on behalf of the importer. The importer pays back the money to financier once the goods are received or as per the terms. This excellent system reduced pressure on both importer and exporters and result in the enormous growth of the international business across the globe.
Different finance products
Trade financiers provide different types of finance products and letter of credit and bank guarantee are most important among them. These two products have different variations to suit different circumstances and transactions.
A letter of credit is the promise given by the bank of the importer to the exporter that the payment will be made once the exporter submits the necessary shipping documents as per the purchase agreement of the importer. This assures timely payment for the exporter and delivery of goods for the importer.
In a bank guarantee, the bank acts as the middleman or guarantor in case if the exporter or importer fails to meet any of the terms of conditions as per the agreement or contract. In such situations, the bank takes initiative to pay a sum of money to the beneficiary.
Start your international trade
Now you better know how to make your payment and products safe in international trade. Make online research to find a reputed online platform that helps with the complete range of services including client search, product search, market search, and most importantly safe payment through trade finance.
Now it is not a mountaineering task to engage in safe international trade. Register with the reputed online import export platform to set a good start to your international business.