2 min read
Definition
Trade finance is a broad category of funding that helps businesses buy and sell goods, especially across borders — covering instruments like letters of credit, purchase-order finance and stock finance. It bridges the gap between paying suppliers and being paid by customers on physical-goods transactions.
In plain terms
A business importing stock might use trade finance to pay the overseas supplier now and repay once the goods are sold. It de-risks and funds the movement of goods through the supply chain.
Why it matters
Trade finance suits importers, exporters and stockists whose cash gap sits in the goods themselves. See purchase-order finance and stock finance.
Related reading
Purchase-order finance
Purchase-order finance advances funds against a confirmed customer order, so a business can pay its suppliers…
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Stock finance
Stock finance (or inventory finance) is borrowing secured against a business's stock, releasing cash tied up…
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Supply chain finance
Supply chain finance is a buyer-led arrangement where a financier pays a company's suppliers early, and the…
Read →Trade finance (defined)
Trade finance funds the goods a business buys or imports before it sells them, paying suppliers so an order…
Read →Funding for UK limited companies
Credicorp lends to your company, not to you personally — short-term working capital with no personal guarantee. See what your business could access.