The world of global trade has been growing at an increasing rate. Today, all the developed and developing countries are indulged in the import and export of goods to meet the emerging needs of their country. But, to make these trade dealings operate in a smooth way; buyers and sellers often opt for Commodity Finance. The use of Trade Finance Solutions not only just makes transactions easier; but also helps to do global trade without facing any issues or risks.
The term “Trade Finance” refers to the different types of Financial Instruments that can allow traders to trade without any hassle. Also, it bridges the gap between them; by adding a third party (Banks) to enter into the contract, as a guarantor. By doing so, it will help to reduce the risk involved; also make it easier to conclude your business.
Different Types of Trade Finance Solutions
Letter of Credit – Act as a written undertaking issued by a bank to guarantee that the seller will receive the payment; once they meet the LC Terms.
Standby Letter of Credit – It’s a guarantee issued by a bank to ensure that the payment will be made; in case if the client can’t able to fulfill their payment obligations.
Bank Guarantee – Serves as a written undertaking to ensure that if the applicant fails to make the payment or defaults in the agreed contract; then, the bank will be liable for it.
Letter of Comfort – Serves as a statement from Bank to notify the seller that the buyer has enough cash funds; to proceed with the purchase of bulk goods and services.
Advance Payment Bond – Issued on behalf of contractor / seller and in favor of project owner / buyer to ensure that the advance payment will be returned to the client. This will be, in case if the contractor / seller does not fulfill their duties; in regard to performing the task or the supply of goods or services.
Performance Bond – It’s issued by a bank to ensure that the contractor or the seller has the capacity, by all means, to complete the project or supply of goods; as per the agreed contract.
Bid Bond – Issued by a bank on behalf of a bidder to assure the project owner that the bidder will take on the job if, awarded.
Is Trade Finance Solutions Works for Your Business?
If you are doing global trade transactions; then it’s likely more open to any risks related to currency flux, shipment delays, payment issues, and so on. So, to safeguard your business from risks involved in global trade; you’ll need to choose the right Bank Instruments such as LC at Sight, SBLC MT760; or Bank Guarantee.
Also, when it comes to construction; there are few contractors who submit inapt low bids to win a contract; then fail to complete the project within the quoted bid. So, to award the project only to the skilled contractors; the project owners demand certain Types of Guarantees from contractors. Further, this is to ensure that the contractor will complete the project; as agreed in the contract.
How Import Letter of Credit Can Help You?
Are you looking for the right Trade Finance support to secure your deal from the trading risks involved? Get support from us!
We are the leading Trade Finance Providers in Dubai. We can help traders by providing the right Financial Instrument which suits their business. With a strong tie-up with good repute Banks; we lend our own credit lines for our clients; so that they can get the required fiscal support on their company’s behalf without blocking their cash funds!
Submit your Commodity Finance requirements to us by filling out the contact form available on our website.
Get Trade Finance Solutions at a Reasonable Cost!