Question

Discuss the various trade finance instruments and services available to importers and
exporters.

Answer 1

Types of trade finance instrument which are available to the importer and exporters are as follows-

A. Factoring - It is one of the post export kind of Finance which will be used by the exporters in order to finance their international trade and they will be using their receivables in order to float securities into market and they are helping themself in raising the cash through special purpose vehicle

B. Payment in advance- payment in advance is a type of International finance investment payment related to exports and imports are made in advance in order to provide them for various kinds of flexibilities in terms of availability of credit and it is risky but it is only done by the trustworthy parties

C. Overdraft is another form of international Finance in which the banks will be allowing overdrafting facilities for various suppliers in order to provide them with the adequate credit availability and which will help them to facilitate their import and export

D. working capital loans are one of the most popular form of loans which will be provided by Financial institutions and commercial banks in order to provide the suppliers of the adequate liquidity in credit availability which will help him in order to maximize his funding capability while exporting

These are the important modes of finance and services which are available to the importers and exporters.