SUISSE BANK PLC - Blog's

SUISSE BANK offers private and corporate digital bank accounts, blockchain banking and trade finance for its world wide clients under the offshore license.

Why Trade Finance is Crucial for SMEs?

Small and medium-sized enterprises (SMEs) hold a significant share of the global economy. Yet, they have limited access to effective risk mitigation and financial strategies. Particularly when they venture into new markets or engage with the global supply chain, they tend to lack an optimum liquidity level that can help meet their financial needs.

 

Traditional bank loans typically do not provide payment protection to SMEs, especially for international trading. Hence, their working capital may remain locked in the shipping for several weeks or months. In this scenario, international trade finance can be the right option to meet the cash needs and also mitigate payment risks. There are many trusted offshore banks and trade financing institutions such as SUISSE BANK PLC that provide tailored financing solutions.

 

Trade Financing Can Help Mitigate Payment Risks

 

One of the biggest challenges that SMEs face with international trading is higher payment risk. On one hand, the importer faces the risk of receiving the goods timely. On the other hand, the exporter is unsure if they will get their full payment on time. There are several factors that result in payment risks, including:

 

  • The credit rating of the importer and history of payment or non-payment
  • Economic or political instabilities
  • Currency fluctuations that may cause exchange rate risks
  • Hikes in transit costs

 

Such payment risks may be addressed by a bank guarantee. It is a written undertaking that a bank or financial institution issues, stating that if you (the customer) fail to meet certain obligations as specified in the trade agreement, the former (bank or financial institution) will make the payment to the party concerned on behalf of you. In many cases, a well-established enterprise will not open a line of trading with you if you cannot provide a bank guarantee.

 

In addition to payment risks, SMEs may face several other international trading challenges such as – lack of working capital, non-compliance with global regulations, regulatory requirements, etc. Trade financing is the best way you can address these challenges and facilitate business growth through trading. Reputable banking institutions such as SUISSE BANK PLC can provide tailored financing solutions to facilitate international trading.