Export Finance Guide | DIT, UKEF, TFG guide
Welcome to TFG, DIT and UKEF’s export finance guide.
The guide aims to provide exporters and importers with the confidence and the knowledge to grow their business overseas.
The current trade climate
Whether you are trading goods overseas for the first time, or looking to expand your international operations, understanding trade finance will give you the confidence to grow your business.
In 2021, the total value of global trade hit a record high of $28.5 trillion, and is expected to break new records in future.
This growing market for the global trade of goods and services is also complemented by a wealth of new technologies, many of which promise to make trade faster, easier, and less costly for all.
From blockchain to artificial intelligence (AI), and from electronic documents to the Internet of Things (IoT), global trade is undergoing a revolution in speed and convenience that will transform how goods and services are moved around the world.
Against this backdrop, and given the complex geopolitical events taking place in the world today, entering global trade as a new participant may seem intimidating, but remember that you are not alone, and there is plenty of help and advice available.
As a non-bank originator and media partner, Trade Finance Global (TFG) has worked closely with UK Export Finance, the UK government’s export credit agency, to produce the UK Trade Finance Guide.
What does the guide cover?
Learning about trade finance for the first time can seem daunting, but it is a worthy investment, given the potential rewards on offer.
The following is a comprehensive list of what this UKEF, DIT and TFG guide covers:
- Explanation of the current climate for trade
- Definition of trade finance and products covered
- An Introduction to the trade cycle
- Types of trade finance
- An introduction to UKEF support
- Pre-shipment, post-shipment, and supply chain finance
- Types of payment: funded versus unfunded trade finance
- Risks and challenges of trade finance
- Trade digitisation
- Providers of trade and export finance
- UK case studies
Download the 2023 export finance guide
Frequently Asked Questions
Trade finance is a powerful driver of economic development.
The World Trade Organization (WTO) estimates that up to 80% of global trade uses trade finance,4 and in 2018, the International Chamber of Commerce (ICC) put the value of the global trade finance industry at $10 trillion.
Small and medium-sized enterprises (SMEs), large corporations, and even governments use trade finance to achieve a range of growth goals.
This could include increasing the size and scope of the goods and services they trade in, scaling up their global operations, or helping them fulfil large contracts.
Many companies use trade finance because it helps them unlock capital from their stock or receivables, which can then be used to finance future growth and development.
Some of the factors that influence propensity to pay:
- Asset finance
- Cash advance
- Equity Finance
- Export finance
- Leasing and asset-backed finance
- Purchase order (PO)
- Receivables discounting
- Term loans
- Trade credit
In short, UKEF helps UK companies to:
- Win export contracts by providing attractive financing terms to their buyers
- Fulfil orders by supporting working capital and trade finance needs
- Get paid by insuring against buyer default
Funded trade finance products are focused on the provision of liquidity from a financial institution to the parties in a trade transaction. There are many different types of funded trade finance instruments, such as factoring, supply chain finance, pre-export finance, and inventory finance, among others.
Unfunded trade finance products are focused on credit enhancement or support, such that the trade finance provider does not offer direct liquidity to the parties in a trade transaction, but supports the transaction by guaranteeing the performance of the parties in their different roles. Examples of unfunded trade finance instruments include letters of credit, demand guarantees, and credit insurance.
How can we help?
The TFG team works with the key decision-makers at 270+ banks, funds and alternative lenders globally, assisting companies in accessing trade & receivables finance.
Our international team are here to help you scale up to take advantage of trade opportunities. We have product specialists, from machinery experts to soybean gurus.
Often the financing solution that is required can be complicated, and our job is to help you find the appropriate trade finance solutions for your SME.
Read more about Trade Finance Global and our global team.
Download the 2023 export finance guide
Download the 2022 export finance guide