How to execute a business transaction
Understand how trade finance can support your cross-border transactions and navigate local laws and regulations.
After exploring ways to join the global trade game and preparing for contract negotiations, you are eager to find the best possible solution to access the financing you need to expand to new markets and manage international transactions.
How can trade finance support your business?
Trade finance includes financial instruments such as loans, letters of credit, guarantees and supply chain finance, which can help your business manage the risks and cash flow challenges associated with cross-border transactions.
Finance instruments can help you by providing financing, allowing you to focus on your production expertise Some tools can also provide cover from risks related counterparties, currencies and geopolitical developments which can enable you to scale up and operate in new markets.
How to get started:
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Choose the right trade finance
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Obtain a globally accredited ICC certificate in trade finance
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Prepare export documents
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Navigate laws and regulations
Step 1: Choose the right trade finance
When trading goods and services, risks regarding financing and payment modalities play a major role and need to be managed with care. Trade finance can provide useful financial instruments and products for importers and experts to facilitate international trade and match your needs with those of your business partner.
What is the right trade finance instrument for you?
As a business leader, make sure you first assess your cash flow needs, trade cycle and risk exposure to determine which solution or product is right for you.
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Letters of credit
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Documentary collections
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Accounts receivable finance
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Supply chain finance
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Trade loans
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Export agency finance
Letters of credit
A letter of credit is a guarantee from a bank that ensures a seller receives payment from a buyer, provided agreed-upon terms are met. This reduces payment risk for both buyers and sellers, particularly when trading internationally with unfamiliar partners.
Documentary collections
Documentary collections involve a bank handling shipping documents and collecting payment on behalf of the exporter, without providing a payment guarantee. This is a cost-effective way to manage transactions while ensuring some level of payment security.
Accounts receivable finance
Accounts receivable finance allows you to sell unpaid invoices to a lender in exchange for immediate cash. This improves cash flow by unlocking working capital tied up in outstanding invoices.
Supply chain finance
Supply chain finance enables buyers to extend payment terms while allowing suppliers to get paid earlier through third-party funding. This strengthens supplier relationships and improves working capital management for both parties.
Trade loans
Trade loans provide short-term financing to cover the purchase of goods or raw materials before they are sold. They help businesses bridge the gap between buying and selling goods, improving cash flow efficiency.
Export agency finance
Export agency finance involves government-backed or multilateral agency-supported loans that help businesses finance export transactions. This offers competitive rates and longer repayment terms, reducing financial risk in international trade.
How to apply for trade finance?
Many institutions provide trade finance solutions, including commercial banks, development banks, fintechs, factoring companies, trade finance specialists and export agencies, among others.
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Invoices: A commercial document issued by a seller to a buyer, detailing goods/services sold, quantities, prices, and payment terms
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Bills of Lading (BLs): A legal document issued by a carrier that serves as evidence of the shipment of goods, their destination and ownership. It serves as the receipt, title document and transport contract.
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Certificates of Origin: A document certifying that the goods being exported were wholly obtained, produced, manufactured or processed in a specific country. How to get you certificate of origin
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Insurance policy: Insurance for the documents being shipped.
Step 2: Prepare export documents
When exporting your goods, the customs authorities from the importing country will require several documents from you, including your export invoice, import or export declarations, a bill of lading or airway bill etc. Very frequently, you or your company’s agent will be asked to present a Certificate of Origin.
Shaping the future of Certificates of Origin
In recent years, more and more Free Trade Agreements have been established as a means to lower trade barriers for frequent trade routes. Free Trade Agreements often enable exporters to self-declare the origin of the exported products without the need for a formal Certificate of Origin. This comes with its own set of complexities, calling for a tool to make the process simpler and more secure for you – ICC Genesis.
Step 3: Navigate laws and regulations
Much like domestic trade, international transactions must comply with their own set of rules. As you move products and services from one market to another, you will first have to consider international sources of law and regulation. You will also have to follow regional or national rules, consisting of laws and regulations that govern the entry and circulation of goods and services, as well as business practices in a specific market.
Tools and resources to help you navigate laws and regulations
