Trade finance

Trade finance explained

Trade finance, in its simplest term, signifies financing for trade. A trade finance transaction requires a seller of goods as well as a buyer.

The seller is the provider of goods. The sellers transaction is backed by a finance company (or individual) who pay the seller upfront.

The buyer would be a company or entity who purchases the goods from the seller on an agreed basis.

The security would usually be an asset, such as a physical goods in a bonded warehouse.

Trade finance

Trade finance in more detail

As one can now see, the trade finance deal is basically the same as any other type of purchase agreement deal.

If a borrower can source an investor (which is becoming increasing easier to do with the advent of communications technology) then both parties will be able to reduce frictional costs such as brokers, regulatory fees (for unregulated loans) and administration fees. This will not always be the case as a good broker may be essential to progress the transaction.

However, there will still be some necessary professional fees, in the form of a surveyor (for valuation) and solicitors in order for both parties to have a secure and fair contract. These are generally more transparent and usually agreed upfront. in particular, with trade finance there is an invoice for goods against an insured approved buyer which can be used as collateral.

It is vital for LEM to know that the supplier fulfills the customer orders satisfactorily before LEM pays their invoices to us, so LEM may ask the buyer to confirm its acceptance of invoices by fax directly or email. Please note that each time the buyer signs a “Confirmation” it acknowledges these terms in respect of that invoice and with respect to future invoices from LEM. Please note that no goods are supplied on sale or return.

LEM can provide

LEM Solutions Limited can provide b2b trade finance as part of its business. Borrowers should note that LEM (and its partners) are not regulated by the FCA so trade finance deals must be for business purpose only. The end buyer of goods will have to qualify for insurance by one of the approved insurers. The goods remain the possession of the investor until payment is made for such.

All loans are underwritten with a common sense approach. The overriding objective is to provide a fast, reliable and transparent service to professional borrowers.


contact form: