Structured Trade Finance is a type of debt finance, which is used as an alternative to conventional lending. It is regularly used in relation to cross border transactions, commodity trading, stock financing or supply chain management. The aim is to promote trade by using non-standard security. STF is attractive to corporates, as the strength of the borrower in the transaction is not looked at as closely when compared to a conventional lending. Instead, more focus is placed on the structure and underlying cash flows. The ultimate aim is the efficient deployment of capital to mirror trade cycles which focuses on the producer to the re-payment from the end buyer.
Some of the Structured Trade Finance options handled by us are as below:
- Stock financing
- Receivables Financing ( Also called Factoring)
- Unsecured Loans
- Asset backed Loans
- Pre-export financing
- Export receivables financing
FACTORING
Receivables financing or debtor financing is called factoring. In factoring, financing company buys a debt or an invoice of a seller company and finances up-to 95% of the invoice value. The financing company then follows up the debt and realises the same on behalf of the selling company, then releases the balance payment to the seller company after appropriating its interest and other costs as agreed with the seller company. The main aim of factoring is to release and accelerate the cash flows of the company by financing the receivables of the company. The security in factoring finance is normally the assignment of the debtor accounts in favour of the financing company. Factoring may be with recourse or without recourse as per mutual agreement.
SNPG Consulting has a network of factoring companies in public and private sectors thereby assisting its clients in unlocking and accelerating their cash flows by financing their credit sales.