Introduction

Abstract

Whilst international trade enables a company to diversify into different markets and broaden its customer and supply base, it can expose the seller and buyer to risks, many of which are unique to exporting and importing. The methods of payment are introduced and how letters of credit, collections, and bank aval can be used to provide a payment mechanism which can mitigate risk. The use of standby credits and demand guarantees to compensate for commercial or payment default is explained. Financing requirements can often exceed the amount of credit support provided by conventional finance. Trade and receivables finance provides an alternative mechanism for the essential supply of working capital to fill the funding gap of companies involved in trade. This enables businesses to increase trade, diversify into new markets, and thereby grow their revenue and that of their financiers.