Top Tips for Trade Finance for UK Small to Medium Sized Businesses

Cashflow can be one of the biggest sources of problems for UK small businesses. It is often not that you can't get orders, or you can't fulfil them, but that aligning the money you need to get supplies and the money you will get from the order can't always be done in a way that matches up. If you receive an order, and you need to pay for supplies you can't afford until the order is paid for, and you can't ask your customer to pay up front, you can end up in an awkward position. This is why there is an option called trade finance.

1. What Trade Finance Does

Trade finance is effectively when a lender who provides the service, such as Touch Financial, pays your bill to your supplier on the understanding that the costs will be covered by the bill your customer will pay. It is intended to enable companies to trade and meet their orders without cashflow issues meaning they have to turn down work. If you are a small business who has experienced these problems, or you are looking to start a business where cashflow between the payment for your work and the supplies you need could be an issue, then it is well worth having a trade finance company on your side.

2. Getting the Most From Your Trade Finance Deal

Trade finance itself is straightforward, and a business in good standing that can prove they have the income coming in should have no trouble getting an arrangement. However, what is well worth considering is combining trade finance with invoice finance. This is where you can offer longer payment terms to your customer while still accessing the funds of the value of their order. Combining the two means you can offer the best and most flexible deals to your own clients, without worrying about having access to the money from the work you did for them in order to pay for things you need for your next order.

The best tip for UK small businesses looking to experience fewer cashflow hiccups, and also offer their customers the kind of payment terms that can help win contracts, is to look to get both trade finance and invoice finance, and use these on their larger orders. This allows you the ability to say yes to orders and pay suppliers, helping you run your business at its most effective.