Trade finance vs invoice finance

2 min read

Before the saleTrade finance

After the saleInvoice finance

Different halvesOf the trading cycle

Two ends of the same cycle

The two products fund opposite ends of the buy-sell cycle. Trade finance (including purchase order and import finance) pays your supplier so you can buy or import the goods you need to fulfil an order — it funds the front of the deal. Invoice finance advances cash against the invoice you raise once you have delivered — it funds the back. A wholesaler or importer often needs both: trade finance to buy the stock, then invoice finance to bridge the wait for the customer to pay.

Understanding which half of the cycle is squeezing your cash tells you which product you need. Read our trade finance guide and invoice finance guide.

How they work together

	Trade finance	Invoice finance
Funds	Buying / importing stock	Cash owed on delivered sales
Timing	Before you sell	After you sell
Repaid by	Selling the goods	Customer paying the invoice
Best for	Importers, wholesalers, manufacturers	Any B2B seller on credit terms

Used in sequence, trade finance funds the purchase and invoice finance recycles the sale, keeping cash moving through a stock-heavy business without a large permanent cash buffer. See purchase order finance and stock finance.

Where a straightforward loan fits

Trade and invoice finance are specialist, often involving the goods, the shipper or your ledger. If your need is simpler — a defined sum to buy stock for a known order, repaid from the sale — a short-term business loan can do the job without tying in your suppliers or customers, and with no personal guarantee.

The Credicorp view

Credicorp lends unsecured to limited companies for working capital including stock purchase, keeping the arrangement simple and off your customer relationships. For complex import chains, a specialist trade financier may fit better; for a straightforward stock-and-sell cycle, a company loan is often cleaner. Register to apply. Educational content, not financial advice.

Frequently asked questions

What is the difference between trade finance and invoice finance?

Trade finance pays your supplier so you can buy or import stock before you sell it — it funds the front of the deal. Invoice finance advances cash against the invoice you raise after delivering — it funds the back. Many importers and wholesalers use both across the same trading cycle.

Can I use both together?

Yes, and stock-heavy businesses often do. Trade finance funds the purchase of goods, then invoice finance releases cash from the resulting sale while you wait for the customer to pay. Used in sequence they keep cash moving without a large permanent buffer.

Is a business loan simpler than trade finance?

Often, yes. Trade finance can involve your supplier, shipper and the goods themselves. A short-term business loan gives you a defined sum to buy stock and repay from the sale, without tying in third parties — cleaner when your need is straightforward rather than a complex import chain.