Top Trade Finance providers for Businesses in Australia
9 Trade Finance Providers in Australia
Which finance companies offer Trade Finance
Trade Finance can be a specialised firm of funding but there is a number of trade finance providers and each has their niche which they work in. Finding who provides what is just the first step. Below is a list (in alphabetical order) of the major trade finance providers and their product range in Australia. The list is long and extensive so if you'd rather leave the hard work to someone else, feel free to contact us directly. Click here to contact us for a no obligation quote >
How does trade finance work?
Trade finance is the financing of international trade flows. It exists to mitigate, or reduce, the risks involved in an international trade transaction.
There are two players in a trade transaction:
an exporter, who requires payment for their goods or services, and
an importer who wants to make sure they are paying for the correct quality and quantity of goods.
Secure trade finance depends on verifiable and secure tracking of physical risks and events in the chain between exporter and importer. The advent of new information and communication technologies allows the development of risk mitigation models which have developed into advance finance models. This allows very low risk of advance payment given to the Exporter, while preserving the Importer's normal payment credit terms and without burdening the importer's balance sheet. As trade transactions become more flexible and increase in volume, demand for these technologies has grown.
Types of Trade Finance Products
The market distinguishes between short-term (with a maturity of normally less than a year) and medium to long-term trade finance products (with tenors of typically five to 20 years).
These are the different types of trade finance products out there:
- Letter of credit
- Supply chain finance
- Bank Guarantee
- Structured trade and commodity finance
- Export and agency finance
- Trade credit and political risk insurance
Arab Bank isn't on top of everyone's known banks but it certainly has an extensive list of solutions under trade finance:
-Import Documentary Letter Of Credit
-Export Documentary Letter Of Credit
-Confirmed Export Documentary Letter Of Credit
-Guarantees For International Trade
ANZ has done a great job in marketing itself as the Asia specialist (albeit there had been some pull back from this focus recently). Export and import trade finance solutions at ANZ help manage your business's cash flows more effectively and mitigate risk.
The following ANZ trade solutions may assist in managing cash flow:
-Trade Finance Loans
-Documentary Letters of Credit
-Bills Negotiated Not Under Credit
As a subsidiary of one of the big four (Westpac), you would expect Bank of Melbourne (or more lovingly known as BoM) would have solutions in this space. Services for exporters:
-Letters of credit - advising, negotiation and confirmation, subject to satisfactory bank/country risk being ascertained
-Documentary collection of export proceeds anywhere in the world
-Negotiation of documents sent on a collection basis
-Direct collection service
-Post-shipment finance for goods sold on extended terms
-Inward payments in Australian dollars or foreign currencies
Services for importers:
-Import Letters of Credit establishment
-Inward Documentary collections processed promptly
-Payments to overseas suppliers in Australian dollars or foreign currencies
-Post-shipment finance for up to 180 days in Australian dollars or foreign currencies
-Prepaid letters of credit - for one off requirements
Recent hiring by BoQ is showing a clear focus in its trade and international payment solutions.
Features and Benefits:
-Available for businesses involved in importing, exporting and/or domestically trading goods and services
-No minimum transaction size
-Available in all the major currencies, including but not limited to: AUD, USD, GBP, EUR, NZD, CAD and JPY
-Can be used to meet a variety of needs, depending on your circumstances
-Fixed term with fixed interest rate may enhance cash flow management (partial pre-payments are allowed before the maturity date)
-Maximum term of finance for a specific transaction is typically 180 days and should reflect the cash conversion cycle or stock turn
-Establish and amend import documentary letters of credit, and monitor a range of international transactions using Trade Enabler, BOQ's online trade finance system
Another subsidiary of a big four (this time Commbank), Bankwest also provides the necessary solutions for is internationally focused business clients:
-Import Documentary Letters of Credit (DLC)
-Export Documentary Letters of Credit (DLC)
-Trade Advances – Import and Export
-International Bank Guarantees and Standby
-Letters of Credit
-Without Recourse Export Finance
If the big four, we think Commbank is the least focused in this area. That said, they certainly have a very extensive and thorough offering of Trade solutions:
-Foreign Currency Account
-Supply chain finance
-International money transfer
-International trade finance for importers and exporters
-Invoicing in Renminbi (RMB)
Here's what you get:
-Access to short term finance solution to keep your business running smoothly
-The option to finance in either Australian dollar or other major foreign exchange currencies
-Payment terms that align with your trading cycle, from 7 days to 180 days
Suitable if you:
-Need funding for the purchase of goods or services prior to shipment or offering extended payment terms to your buyers
-Have an established track record
-Have established credit control processes and systems
-Documentary & Standby Letters of Credit (Cashed-Secured available)
-Documentary Letters of Credit
-Pre-shipment and Post-shipment Finance
Westpac can provide you with short term, fixed rate finance for the shipment of goods.
The advantages to both importers and exporters are that it is:
-Available in Australian dollars and most major currencies
-Has flexible terms and currencies
-Acts a useful cash management tool
-Fixed term to match that of the underlying trade transaction (not to exceed 180 days)
-Credit assessment undertaken to supply a credit limit based on your trade needs
-Interest can be charged on a discount (establishment) or yield (payment) basis
-Repayment is required in full at maturity
-Prepayment without penalty is allowed if within a 10 calendar day period prior to maturity
-Rollover of the facility is permitted as long as the term does not exceed 180 days
-A minimum $20,000 loan amount limit applies, there is no maximum limit.
Subscribe to receive more useful articles.
All too complicated?
Running a business is hard enough, if you want some advice on which Trade Finance provider is best for you, feel free to contact us.