Trade Finance France | What is Trade Finance?

2024 Guide | Trade Finance Global

Trade Finance - France

Welcome to the France Trade Finance and International Trade hub. Find out how our France-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 France-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 France team



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

 

Finance Queries:

fr.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 France 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

Understanding rules of origin: Getting the details right Rules of Origin are the rules that determine where a good was obtained or manufactured (its economic nationality).
Trade Finance in the modern era Embracing agility Trade Finance in the modern era: Embracing agility Hear from Finastra’s Iain MacLennan on the changing nature of Trade Finance. Discover the challenges and opportunities of digitalisation.
France’s Alexandre Holroyd brings forth proposal to boost digital trade in France France’s Alexandre Holroyd brings forth proposal to boost digital trade in France France has introduced a bill, aiming to substantially boost France’s digital trade and elevate the financial sector’s attractiveness.
France’s Alexandre Holroyd brings forth proposal to boost digital trade in France France’s Alexandre Holroyd brings forth proposal to boost digital trade in France France has introduced a bill, aiming to substantially boost France’s digital trade and elevate the financial sector’s attractiveness.
Bpifrance - French export market overview, an exclusive interview with the French ECA VIDEO | Bpifrance – French export market overview, an exclusive interview with the French ECA At Excred International, Trade Finance Global’s (TFG) Deepesh Patel sat down with Maëlia Dufour, director international relations, business development, rating, environment and climate at Bpifrance and president of the Berne Union, to learn more about the intricacies of the trade credit industry.
EU funds to explore financing hydrogen pipeline between France and Spain EU funds explore financing French and Spanish hydrogen pipeline Chief executive of gas grid operator Enagas, Arturo Gonzalo Aizpiri told reporters on Thursday that the European Union funds could finance 30% – 50% of the underwater hydrogen pipeline to… read more →
TradeTech and deep tier financing Tradetech and deep tier financing: How emerging technology can help supply chains meet ESG standards Alex Gray, head of trade finance at The London Institute of Banking & Finance, explains why the staff at trade banks will have an important role to play in gathering and utilising ESG data from supply chains 
office building cbi featured Q&A | CBI’s Liliana Fratini Passi on innovation in the banking sector In light of the current landscape, Trade Finance Global (TFG) were delighted to have the opportunity to speak with Liliana Fratini Passi, Managing Director, CBI, about how innovating and collaborating may be the way forward. 
sustainable green finance trade finance Commerzbank on standardisation: the key to sustainable trade finance The world of trade is changing. Increasingly, the topic of environmental responsibility is taking centre stage, with discourse specifically circling around how the finance industry can implement sustainability measures more effectively. 

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 France trade team

Speak to our trade finance team

Quick Links

Latest France feature from Trade Finance Talks

Download our free trade finance guide



Latest France Trade News

13Mar

France’s Alexandre Holroyd brings forth proposal to boost digital trade in France

0 Comments

France has introduced a bill, aiming to substantially boost France’s digital trade and elevate the financial sector’s attractiveness…. Read More →

21Dec

Video | ITFA Christmas Party: Unwrapping the EU Late Payments Regulation

0 Comments

Businesses and public authorities across the EU may be facing tougher laws on late payments, with the European Commission proposing… Read More →

24Aug

Global trade in Q2 2023: OECD report highlights shifts and challenges

0 Comments

Today, the OECD released their International Trade Statistics report for Q2 2023. The report offers an insight into the global… Read More →

01Aug

EU growth higher than expected in Q2

0 Comments

The eurozone witnessed a return to growth during the second quarter of 2023, recording an expansion that surpassed expectations, having… Read More →

26Jun

International support grows for shipping emissions levy ahead of IMO meeting

0 Comments

In preparation for the upcoming International Maritime Organization (IMO) meeting, a Paris summit convened by the French presidency has garnered… Read More →

23Mar

VIDEO | Bpifrance – French export market overview, an exclusive interview with the French ECA

0 Comments

At Excred International, Trade Finance Global’s (TFG) Deepesh Patel sat down with Maëlia Dufour, director international relations, business development, rating,… Read More →

02Feb

EU funds explore financing French and Spanish hydrogen pipeline

0 Comments

Chief executive of gas grid operator Enagas, Arturo Gonzalo Aizpiri told reporters on Thursday that the European Union funds could… Read More →

20Dec

Tradetech and deep tier financing: How emerging technology can help supply chains meet ESG standards

0 Comments

Alex Gray, head of trade finance at The London Institute of Banking & Finance, explains why the staff at trade… Read More →

16Dec

Q&A | CBI’s Liliana Fratini Passi on innovation in the banking sector

0 Comments

In light of the current landscape, Trade Finance Global (TFG) were delighted to have the opportunity to speak with Liliana… Read More →

07Nov

Commerzbank on standardisation: the key to sustainable trade finance

0 Comments

The world of trade is changing. Increasingly, the topic of environmental responsibility is taking centre stage, with discourse specifically circling… Read More →

09Aug

‘Heatflation’ warning as 2022 EU crop harvests affected by climate change

0 Comments

Fears continue to grow over a potential global food security crisis as European farmers struggle to save their crops from… Read More →

24Feb

Safe keeping: The promise of government-controlled European strategic gas reserves

0 Comments

After record-high gas prices and extreme price volatility in Q4 2021, European policymakers are now warming to the idea of… Read More →

31Dec

2021 – A Year in Review with Trade Finance Global

0 Comments

As the clocks struck midnight, we looked back at over 700 articles, handpicking our favourite stories that made the headlines… Read More →

03Nov

UK economy ‘trapped by policy choices’ amid rising inflation, says new Euler Hermes report

0 Comments

A new report by Euler Hermes has found that the UK economy is “trapped by policy choices” going into the… Read More →

03Nov

COP26: Denmark announces greener shipping declaration signed by US, 12 other countries

0 Comments

An agreement has been reached by Denmark, the US, and 12 other countries on delivering a net-zero global maritime industry… Read More →

14Sep

Euler Hermes: 15% of UK SMEs at risk of insolvency in the next four years

0 Comments

Euler Hermes’ newest research found that 15% of the UK’s SMEs are at risk of insolvency in the next four… Read More →

21Apr

FCI reports 6.6% drop in global factoring statistics in 2020

0 Comments

The first estimates for the factoring industry worldwide in 2020 have been announced today by the FCI’s Peter Mulroy. Factoring… Read More →

16Mar

Using education to make factoring more inclusive

0 Comments

Teaching businesses to unlock working capital and grow their operations through factoring education programmes (FCI)
Read More →

Visit our Global Hubs

TFG in Translation

About the Author

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

Back to Top