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Trade finance is a great product for importers of goods to the UK. When combined with an invoice factoring facility trade finance can help to finance the whole trade cycle. This means finance can be provided right the way from the confirmed order from your customer right the way through to your customer settling the invoice.

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Import finance is used to facilitate the import of goods and their subsequent sale.

We typically use a combination of trade finance and invoice factoring to structure a finance facility that funds the entire trade cycle.

On the back of a confirmed order we can provide a finance facility that will pay your supplier and will finance the transaction right up to your customer settling your invoice.

Trade finance can be a valuable source of finance that can facilitate international trade. We typically use trade finance along side an invoice finance facility to assist importers.

If an importer has a confirmed order from a credit worthy customer we can provide a letter of credit to a supplier guaranteeing payment. They can then ship the goods. Once received the supplier is paid by the LC. The goods are delivered and an invoice is raised. An invoice finance facility can finance the invoice which repays the trade finance facility. When the customer pays the invoice finance facility is repaid.

The whole transaction from start to finish is financed. This allows small businesses to accept large orders they would otherwise have to turn down because of lack of working capital.

Trade finance facilities such as a letter of credit combined with a factoring facility can provide an ideal solution for importers. This combination can allow importers who take confirmed orders from reputable customers to pay their supplier. By funding the full trade cycle it allows them to raise finance from order right through to when their customer pays.

How does this work?

  • The importer receives a confirmed order
  • They place that order with their supplier
  • A letter of credit is raised in favour of the supplier
  • Good are shipped and when received the supplier receives payment from the LC
  • Goods are delivered and an invoice is raised
  • The factoring facility repays the LC
  • When the customer pays the factoring facility is repaid


  • A confirmed order
  • from a credit worthy customer
  • usually a 20% profit margin is required


Some banks require tangible security in the form of cash cover or a charge on property. However, within the market there are lenders who will happily raise an LC on the back of a confirm order.

Purchase order factoring allows your business to accept the large orders that you have always been waiting for. If you are looking for purchase order factoring it is worth calling Smart Factoring Quotes.

How does purchase order factoring work?

If you have a confirmed order from a credit worthy customer a purchase order factoring company can pay your supplier, typically by way of a letter of credit, for the goods. When the goods are delivered to you the purchase order factoring company will require you to deliver the goods to your customer and raise an invoice.  A traditional invoice finance facility would then be used to repay the letter of credit or loan against import. When your customer pays this repays the invoice finance facility.

The whole trade cycle is financed from the confirmed purchased order right through to your end customer paying.

Benefits of Purchase Order Factoring

  • Peace of mind that payment is only made if the right quality and quantity of goods are delivered by your supplier.
  • Ability to take on large lucrative orders.
  • Credit checking of your end customer provides more peace of mind.
  • Seamless financial support for your business from order right through to end customer payment.