While banks have in the past been the main suppliers of trade finance, importers and exporters are increasingly turning to specialist non-bank trade finance companies that fund the import or export of inventory on the longer cash flow cycles necessitated by international trade, says Menso Kwint of Lombard Trade Finance. Trade finance institutions specialise in inventory or stock funding, whereas a traditional bank often provides a wide range of financial products and services, which is why trade financiers differentiate themselves by truly understanding a customer’s position, financial needs and the stock they fund, says Kwint. “Therefore, often higher facilities may be approved to adequately enable an internationally trading business. Monies are lent out on extended credit terms – of 120 days at the norm – to match a cash flow cycle where goods are paid for upfront, shipped into South Africa and then sold through wholesale or retail channels.”
