Trade finance is the method importers and exporters of commodities and goods use to finance their business. Basically, trade finance has been in existence for many thousands of years - and one can trace the roots of trade finance and structured trade finance right back to the early days of China and the silk route, Mesopotamia and Europe. Trade Finance was around long before Europeans settled in America and long before the world's stock markets were born!
Today, Commodity Trade Finance is a massive, multi-billion dollar business. To finance the purchase and sale of these goods and commodities as the world trades more and more goods and commodities are bought and sold to lend money - right across the global supply chain more and more banks and financiers are needed.
How is trade finance and structured trade finance useful?
Take an example: imagine you are a trader in cocoa beans in Cote d'Ivoire, buying beans locally and selling them to foreign buyers. To make your purchases, you will need to have money to buy the cocoa up-country in Africa, prior to their export. What might be supported by your bank who, if they are traditional lenders, will only lend against your balance sheet?
This is where trade finance and structured trade finance is useful - your business can grow and develop if you use the services of a specialist trade finance department using the collateral of the goods you are trading, rather than your own balance sheet or other assets structure trade finance structures can be tailored to your needs.
What is the basis of trade finance and structured trade finance?
Goods and commodities have an underlying value of their own in Commodity Trading Services. For example, if cocoa beans are worth many hundreds or even thousands of dollars per ton, then once a big pile of beans is accumulated in one place; in a warehouse or on a ship, it is worth a lot of money. Minus some amount to take account of price and other risks a bank may lend money against the total value of the beans.
Today, Commodity Trade Finance is a massive, multi-billion dollar business. To finance the purchase and sale of these goods and commodities as the world trades more and more goods and commodities are bought and sold to lend money - right across the global supply chain more and more banks and financiers are needed.
How is trade finance and structured trade finance useful?
Take an example: imagine you are a trader in cocoa beans in Cote d'Ivoire, buying beans locally and selling them to foreign buyers. To make your purchases, you will need to have money to buy the cocoa up-country in Africa, prior to their export. What might be supported by your bank who, if they are traditional lenders, will only lend against your balance sheet?
This is where trade finance and structured trade finance is useful - your business can grow and develop if you use the services of a specialist trade finance department using the collateral of the goods you are trading, rather than your own balance sheet or other assets structure trade finance structures can be tailored to your needs.
What is the basis of trade finance and structured trade finance?
Goods and commodities have an underlying value of their own in Commodity Trading Services. For example, if cocoa beans are worth many hundreds or even thousands of dollars per ton, then once a big pile of beans is accumulated in one place; in a warehouse or on a ship, it is worth a lot of money. Minus some amount to take account of price and other risks a bank may lend money against the total value of the beans.
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