Invoice Financing

Financing built around your trade cycle

Trade facilities are a family of short-term financing tools banks use to fund the gaps that appear in a trading business — the weeks or months between paying a supplier and getting paid by a customer. Instead of a single lump-sum loan, they work as flexible limits you draw on when a particular transaction needs funding, and repay as the cash comes in. For importers, exporters, wholesalers and distributors, they turn a cash-flow bottleneck into a manageable, transaction-by-transaction cost.

The common forms

A few tools do most of the work. A letter of credit gives your overseas supplier a bank-backed guarantee of payment, so they ship with confidence while you defer paying until the goods arrive. Trust receipts and import loans finance the goods themselves for a short window. And invoice financing lets you draw cash against invoices you have already issued but not yet been paid for — you receive most of the value now, and the balance, less fees, when your customer settles. Which combination fits depends on whether your pressure point is paying suppliers, funding inventory, or waiting on receivables.

Why businesses use them

Trade facilities let you take on bigger orders than your cash balance alone would allow, negotiate better terms with suppliers because you can pay promptly, and smooth out the lumpiness of international trade, where a single shipment can tie up a lot of capital. Because you typically pay only for what you draw and only for the period you use it, the cost scales with activity rather than sitting on your books as a fixed liability.

Points worth checking

Pricing is often quoted as a fee plus interest on the drawn amount, so the true cost depends on how long each drawing stays outstanding — a facility that looks cheap per transaction can add up if your cycle runs long. Lenders also assess your buyers' creditworthiness, not just yours, since repayment ultimately depends on your customers paying. And documentation matters: clean invoices, purchase orders and proof of delivery keep everything moving.

Getting the right mix of facilities and limits is rarely obvious from the outside. Fundwise compares what different banks will offer against your actual trade flows, so the structure fits how your business really moves goods and money. Tell us about your trade cycle.