Primarily we provide clients with receivables financing solutions allowing them to offer extended repayment terms to their buyers whilst managing cash-flow and risk. TRADEFINANCE2020 - further explained
MAIN MARKETS (Exporter location) Germany, France, UK, USA, Brazil, Turkey
This is where we see exporters that could be qualified for our funding model.
In general we offer these services to companies based in Germany or in other markets where we have a presence e.g. United Kingdom, France, USA, Brazil, Turkey. The Russian (Moscow) Market, Greece, Egypt, UAE, India, Singapore and others are not a preference, but can be considered on a case by case basis.
In our MAIN MARKETS we may also be able to offer Pre-Shipment Financing(*) as the banks we deal with have a presence and can assess the risk associated with this and understand the legal position locally. In markets like Russia (Moscow), Greece, Egypt, UAE, India, Singapore we do not avail pre-shipment financing. Also, we do not offer invoice discounting or factoring.
(*) To evaluate the possibility of Pre-Shipment Finance we need 3 year audited Statements, a brief summary of the company’s trading history providing information to evaluate the Exporter Performance Risk and providing information about earlier performance.
TARGETED CLIENTS (Buyer / Importer location)
A core part of our business is to work with exporters of capital equipment who are looking to offer, or are required to meet extended repayment terms. Typically this would be achieved using a Letter of Credit with deferred payment terms e.g. payment due 1 year or more after shipping. In cooperation with investors and banks of the KIPCO Group, we would discount these future payments. Acceptable bank locations to issue acceptable DLC or SBLC can be identified through our Country List.
Our country list provides a good view of our appetite for bank risk geographically. The number stated represents the typical tenor in years which could be considered.
Focus is to identify buyers of capital equipment from suppliers located in the UK; France, Germany, USA, Brazil, Turkey who seek a mechanism to pay over an extended period. We seek established entities able to raise a Letter of credit which then could be discount for the exporter. Alternatively, if the buyer is credit worthy we could source insurance allowing a financing structure to be put in place.
For established companies only
The service is for well established buyer- and seller companies only. This is not available for you if you do not have an established company and a longer term track record of successful trading.
The Importer’s bank has to support its client
Your client’s (importer’s) bank will have to agree to issue a Letter of Credit guarantee instrument to support the transaction. This can be for payment tenors from 180 days to 5 years, although most commonly tenors are 180/360 days.
The verbiage of the LC has to assure “no recourse”
The guarantee instrument will be drafted to assure that there cannot be a later claim resulting in a legal dispute.
The bank has to be acceptable
The buyer’s bank (issuing the guarantee instrument) will not need to be a prime world bank, but it will have to be an acceptable institution. In some instances a confirmation may be required from the issuing bank’s European counterpart.
The country of the importer has to be “on our list”
There is a regular evaluation of country risk and we publish this list providing information of “our” country rating and the maximum tenor that can be acceptable for selective transactions which can be from 180 days to 5 years.
The higher your margin, the better the chances
There has to be sufficient margin in the transaction. The higher the margin, the greater are the chances that your transaction is acceptable for our financing strategy.
The costs involved
This is a very competitive financial model based on low interest rates. Ultimate costs depend upon the individual transaction, the parties and the risks involved. As a general guideline, the transaction costs involve a set up fee of about 1% and annual costs (pro rata) of around 6% (p.a.) plus commission.
There is a single obligor limit of around Euro 35 M.
Typical transaction value is however Euro 17 M.