Although international trade has been in existence for centuries, trade finance developed as a means of facilitating it further. The widespread use of trade finance is one of the factors that have contributed to the enormous growth of international trade in recent decades.
In its simplest form, trade form works by reconciling the divergent needs of an exporter and importer. While an exporter would prefer to be paid upfront by the importer for an export shipment, the risk to the importer is that the exporter may simply pocket the payment and refuse shipment. Conversely, if the exporter extends credit to the importer, the latter may refuse to make payment or delay it inordinately.
The most common solution to this problem is through a LETTER OF CREDIT, which is opened in the exporter’s name by the importer through a bank in his or her home country. The letter of credit essentially guarantees payment to the exporter by the bank issuing the letter of credit upon receipt of documentary proof that the goods have been shipped. Although this is a sometimes a cumbersome process, the LETTER OF CREDIT system is one of the most popular trade finance mechanisms.
CBS has direct relationship’s with Trade Finance houses who will provide your individual requirements on a case by case basis.