Trade Finance – United Arab Emirates

2024 Guide | Trade Finance Global

Trade Finance - United Arab Emirates

Welcome to the UAE Trade Finance and International Trade hub. Find out how our UAE-based team can help you access trade finance to increase your imports and exports, or find the latest research, information and insights on trade finance here.

What is trade finance?

Trade Finance is the financing of goods or services in a trade or transaction, from a supplier through to the end buyer. It accounts for 3% of global trade, worth some $3tn annually. ‘Trade Finance’ is an umbrella term, which includes a variety of financial instruments that can be used by an importer or exporter.

These include:

  • Purchase Order Finance
  • Stock Finance
  • Structured Commodity Finance
  • Invoice Finance (Discounting & Factoring)
  • Supply Chain Finance
  • Letters of Credit (LCs) and;
  • Bonds & Guarantees

The terms Import Finance and Export Finance are used interchangeably with Trade Finance.

In order to address some of the common issues and misunderstandings around Trade Finance, we have put together this short guide.

How can trade finance benefit my UAE-based business?

Trade finance facilitates the growth of a business by securing funds required to purchase goods and stock. Managing cash and working capital is critical to the success of any business. Trade finance is a tool which is used to unlock capital from a company’s existing stock or receivables or add further finance facilities based on a company’s trade cycles.

Why does this help? A trade finance facility may allow you to offer more competitive terms to both suppliers and customers, by reducing payment gaps in your trade cycle. It is beneficial for supply chain relationships and growth.

Other benefits of trade finance

  • Short to medium-term working capital, using the underlying products or services being imported/exported as security/collateral. It increases the revenue potential of a company, and earlier payments may allow for higher margins.
  • Trade finance allows companies to request higher volumes of stock or place larger orders with suppliers, leading to economies of scale and bulk discounts. 
  • Trade finance can also help strengthen the relationship between buyers and sellers, increasing profit margins. It allows a company to be more competitive.
  • Managing the supply chain is critical for any business. Trade and supply chain finance helps ease out cash constraints or liquidity gaps – for suppliers, customers, third parties, employees or providers. Earlier payments also mitigate risk for suppliers.

It is important to note that trade finance focuses more on the trade than the underlying borrower, i.e. it is not balance sheet led. Therefore, small businesses with weaker balance sheets can use trade finance to trade significantly larger volumes of goods or services and work with stronger end customers.

Due to the embedded risk mitigants that surround trade finance lending and instruments, it leads to the potential of a diversity of supplier base for trading companies. A more diverse supplier network increases competition and efficiency in markets and supply chains.

Companies can also mitigate business risks by using appropriate trade finance structures. Late payments from debtors, bad debts, excess stock and demanding creditors can have detrimental effects on a business. External financing or revolving credit facilities can ease this pressure by effectively financing trade flows.

 

Get started – talk to our UAE team



If you have a trade finance enquiry, please use the contact form below.

 

Finance Queries:

uae.team@tradefinanceglobal.com

trade.team@tradefinanceglobal.com

Partnership Queries:

introducers@tradefinanceglobal.com

Find out more about partnering with us here.

 

Want to learn more about Trade Finance?

Look no further. We’ve put together our feature UAE trade finance insights, research and articles, and you can catch the latest thought leadership from the TFG, listen to podcasts and digest the latest in international trade in the MENA region right here.

From the Editor – Trade Finance Insights

Podcast | Empowerment through trade: IFC and Ecobank on tackling the gender disparity in global trade This finding, from the IFC’s whitepaper “Banking on Women Who Trade Across Borders”, speaks to the gender disparity that still exists in the international trade space, particularly in emerging markets.
Ben Hillary Video Web Featured VIDEO | Riding the energy and commodities trading wave and what’s in stock for ETRM/CTRM in the next 5 years At Commodity Trading Week (CTW) in London, where the commodity community was gathered for two days, Deepesh Patel, Editorial Director, Trade Finance Global (TFG) spoke with Ben Hillary, Managing Director at Commodities People.
Factoring and supply chain finance in the shadow of the Areni-1 cave: EBRD's insights from Yerevan Factoring and supply chain finance in the shadow of the Areni-1 cave: EBRD’s insights from Yerevan The EBRD TFP conference gathered industry leaders to discuss evolution of factoring and supply chain finance in emerging markets.
UAE's non-oil trade hits record high, surpasses $952bn in 2023 UAE’s non-oil trade hits record high, surpasses $952bn in 2023 According to officials, the UAE’s non-oil trade reached $952 billion in 2023, breaking previous record highs. Read more about the news here.
Top corporates unsure of leading digital advisors Report: Top corporates unsure of leading digital advisors “None in particular” is the phrase most frequently heard from enterprises ranked in the top 100 for revenue across eight major global markets when asked which provider leads in digital… read more →
HSBC launches just-in-time trade finance solution TradePay in Hong Kong, Singapore, UAE HSBC launches just-in-time trade finance solution TradePay in Hong Kong, Singapore, UAE HSBC today announced the launch of HSBC TradePay, an industry first, document free trade finance solution that enables clients to instantly drawdown trade loans and pay suppliers. HSBC TradePay is… read more →
Indian Central Bank pushes for banks to settle UAE trades in rupee and dirham Indian Central Bank pushes for banks to settle UAE trades in rupee and dirham India’s central banking authority is encouraging domestic banks to advise their clients to settle trade transactions between the United Arab Emirates and India using the dirham (AED) or Indian rupee… read more →
wheat commodity finance grains agriculture supply Abu Dhabi Exports Office and Egypt sign wheat deal UAE-based agribusiness Al Dahra and the Abu Dhabi Exports Office (ADEX) have inked a $500 million contract to supply Egypt with wheat, a statement confirmed on Monday. The five-year deal,… read more →
India and UAE settle first crude oil in rupees India and UAE settle first crude oil in rupees On Monday, the Indian government announced that India and the United Arab Emirates have begun conducting bilateral trade using their respective local currencies.  The prominent transaction involved India’s leading refiner,… read more →

Videos – Trade Finance

Trade Finance Frequently Asked Questions

What types of Trade & Receivables Finance does TFG offer?

TFG assists companies to access trade and receivables finance through our relationships with 270+ banks, funds and alternative finance houses.

We assist specialist companies to scale their trade volumes, by matching them with appropriate financing structures – based on geographies, products, sector and trade cycles. Contact us to find out more.

Trade Finance & Stock Finance

  • Trade Finance (Purchase Order Finance)
  • Stock Finance
  • Pre Export Finance
  • Import & Export Finance
  • Structured Commodity Finance
  • Letters of Credit
  • Bonds & Guarantees

Receivables Finance & Invoice Finance

  • Receivables Purchase
  • Invoice Finance
  • Discounting
  • Factoring
  • Supply Chain Finance

Specialist Trade & Receivables Finance

  • Borrowing Base Facilities
  • Back-To-Back LC Lines
  • Long Dated Receivables – Media, Sport
  • Revolving Credit Facilities (RCF)
What is the process for applying for trade finance?

1. Application

The initial ‘credit’ application drives the process when applying for credit.

Lenders will often ask for information on current assets or collateral that the business owns, including debt and overdrafts, assets that the company or directors own (property, equipment, invoices).

2. Evaluating the Application

The evaluation process will normally involve some kind of credit scoring process, taking into account any vulnerabilities such as the market the business is entering, probability of default and even the integrity and quality of management.

3. Negotiation

Eligible SMEs applying for trade finance can negotiate terms with lenders. An SME’s aim with a lender is to secure finance on the most favourable terms and price. Some of the terms that can be negotiated can include fees and fixed charges, as well as interest rates.

4. The Approval Process and Documentation of a Loan

Typically, the account officer who initially deals with the applicant and collects all of the documentation will do an initial credit and risk analysis. This then goes to a specific committee or the next level of credit authority for approval. If the loan is agreed (on a preliminary basis) it goes to the legal team to ensure that collateral can be secured/ protected and to mitigate any risks in the case of default.

Read our full ‘trade finance application process’ here.

Strategic Partners:

Get in touch with our UAE trade team

Speak to our trade finance team

Quick Links

Latest UAE feature from Trade Finance Talks

Download our free trade finance guide



Latest UAE Trade News

19Feb

UAE’s non-oil trade hits record high, surpasses $952bn in 2023

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According to officials, the UAE’s non-oil trade reached $952 billion in 2023, breaking previous record highs. Read more about the… Read More →

11Jan

WEF to host TradeTech Forum in Abu Dhabi

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Abu Dhabi, UAE – February 27, 2024 – The inaugural TradeTech Forum, hosted by the World Economic Forum (WEF), the… Read More →

01Dec

COP28: UAE to announce $30bn climate-focused fund

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30Oct

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30Oct

Report: Top corporates unsure of leading digital advisors

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17Oct

Video | CEO insights: Driving UAE’s economic diversification from oil to knowledge

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19Sep

HSBC launches just-in-time trade finance solution TradePay in Hong Kong, Singapore, UAE

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HSBC today announced the launch of HSBC TradePay, an industry first, document free trade finance solution that enables clients to… Read More →

24Aug

Building Brick by BRIC(S): Bloc expands with six new counties

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22Aug

Indian Central Bank pushes for banks to settle UAE trades in rupee and dirham

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India’s central banking authority is encouraging domestic banks to advise their clients to settle trade transactions between the United Arab… Read More →

17Aug

Abu Dhabi Exports Office and Egypt sign wheat deal

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UAE-based agribusiness Al Dahra and the Abu Dhabi Exports Office (ADEX) have inked a $500 million contract to supply Egypt… Read More →

16Aug

India and UAE settle first crude oil in rupees

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On Monday, the Indian government announced that India and the United Arab Emirates have begun conducting bilateral trade using their… Read More →

19Jul

The critical need for short-term credit insurance in West Africa

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Micro, small and medium-sized businesses are the backbone of employment and economic growth in West Africa. How can short-term credit… Read More →

12Jun

India and UAE agree to non-oil trade deal

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India and the United Arab Emirates have mutually agreed to raise non-petroleum bilateral trade between the two countries to $100… Read More →

01Jun

New report: UAE growth to reach AED 2tn by 2030

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Today, the report, “Future of Trade: New opportunities in high-growth corridors” was released by Standard Chartered. The report predicts that… Read More →

31May

FAB and Alfanar extend trade finance reach in KSA with supply chain finance programme

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First Abu Dhabi Bank (FAB), the UAE’s largest bank and a global financial powerhouse, strengthens its trade product offerings by… Read More →

17May

UAE becomes seventh country to sign WTO Fisheries Subsidies

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On 16 May, the United Arab Emirates (UAE) became the seventh WTO member to sign the instrument of acceptance for… Read More →

17May

Out now! Trade Finance Talks – the MENA edition (read free)

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Historically, the Middle East and North Africa (MENA) region has always been a cornerstone of the global trade landscape, with… Read More →

16May

MENA Country Profiles – Trade and Geopolitical Overview 2023

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Trade Finance Global is proud to partner with Dr Robert Besseling, Pangea-Risk and John Miller, Trade Data Monitor to provide… Read More →

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About the Author

Gabrielle Ann Vilda previously worked as part of the editorial team at Trade Finance Global.

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