Trade Finance is usually relating to the international trade when the seller of goods requires the purchaser to prepay the goods before they are shipped. The purchaser may be required to produce a letter of credit to the seller that the payment will be made upon verification of certain documents providing proof of shipment. There are several financing options for importers and exporters including trade credit insurance. Some of these financing options can be done in conjunction with various government export programs.
Production financing is a more overall financing arrangement as it pertains to the process of raw materials into a finished goods product. This would require various levels of financing and varied interest rates since the risk is higher while it is in it’s production phase. Once it becomes a finished good then it will be treated under inventory financing.
Supply Chain Financing
This type of financing is usually related to the selling of any products that are displayed and sold to a retail customer. This is where the products would be displayed in such a way that it would stimulate interest for the retail customer to make a purchase.
In this form of financing funds are transferred from the lender to the suppler for goods or services (contractor) on behalf of the owner (contractee). These payments can be interim arrangement, progress payment, performance payment etc. The loan is based on a number of factors including the value of legal contract of goods and services, the financial strength of the contractee and the ability of the contractor to complete the work.