Tolling
Tolling finance funds raw material while a processor turns it into a finished product for a fee. The owner keeps the goods, the finance provider holds a claim over them, and the sale of the product repays the finance.
Trade loan
A trade loan is a short-term bank loan for one import or export, repaid from the money that deal brings in. The exporter gets cash to fill the order, and the importer gets time to sell before repaying.
Pre-export finance
Pre-export finance pays an exporter before the goods ship. The lender rests on the assigned export contract, the buyer pays the lender directly, and the loan is settled from that payment, with any surplus going to the exporter.
Inventory finance
Inventory finance pays you part of the value of goods you hold before sale. The finance provider keeps title or security over the goods and gives it back when the sale money repays the advance.
Seasonal trade packs a year's funding need into a few months, so the facility has to peak with the harvest
Harvests set when an exporter's cash goes out and when it comes back. US soybean exports have historically peaked September to December. Pre-export, warehouse and yearly renewed facilities are built to rise and fall with that curve.
Trade finance shortens the cash cycle by funding receivables, inventory or payables one term at a time
Working capital stays tied up for the length of the cash conversion cycle. Factoring, inventory finance, payables finance and export working capital finance each work on one part of that cycle to release cash.
The cash conversion cycle counts the days cash is tied up in trade, and each day has a financing cost
The cash conversion cycle counts the days cash is tied up in trade: days sales outstanding plus days inventory outstanding minus days payable outstanding. Every day in the cycle locks up a day of sales that has to be funded.
Most world trade relies on short-term credit, extended by the seller, the buyer or a bank
The WTO estimates 80 to 90 percent of world trade relies on trade finance, mostly short-term. Banks directly support about one-third of global trade, and funded trade loans averaged about 3.5 months.