Most businesses are involved in some form of international trade or commerce, be it production abroad, export sales or importing raw materials. Cross-border trade brings complexities in the form of currency risk as well as often increased business risk.
Trade finance is any form of finance that is issued to support international trade. Products include letters of credit, debtor finance, supply-chain finance, export credit, insurance or any other business loan especially designed with the complexities of international trade in mind. Trade finance companies often act as third parties to remove financial and/or supply risk in international transactions. Trade finance can be provided by banks, online lenders and specialized trade finance companies as well as private syndicates. Certain suppliers and buyers also offer inhouse trade finance products. The use of trade finance is widespread according to the World Trade Organization which estimates that 80-90% of global trade is supported by trade finance.