Trade finance is the ability to provide financing for a transaction that spans from supplier to client and then from client to final customers. It is often referred to as “off-balance-sheet” finance and as such it does not impact on a client’s existing bank facilities.

Berkeley Trade Finance offers flexibility and expertise in looking beyond established parameters when considering a financing proposition. Our financing criteria are based on an order from a credit insurable end customer. We will finance transactions from as small as £25,000 up to £1,000,000, with each case being considered on its own merits. Flexibility and the ability to look outside the box are the key factors in our organisation.

Trade finance is most simply understood as the ability to provide financing for a transaction that spans from a supplier of goods “the seller” to the final customers “the buyer”. This covers both international and domestic transactions and often involves an intermediary party “the client” who buys from the primary manufacturer and sells to the actual end user or retailer.

This can be achieved by transferring the risk to the credit worthiness of the final buyer of the products via a factoring or invoice discounting facility. Such facilities on a stand-alone basis only address the post delivery cash flow requirements by funding a company against their sales ledger or a selection of customer sales invoices once goods have been delivered. However combined with a purchase finance facility then “the client” is also provided with the finance at the time of the purchase of the goods from the supplier.

Purchase finance product combined with invoice finance facility

Berkeley provides a purchase finance facility for goods purchased from abroad or from the UK either by Letters of Credit, through documentary collections or by direct payment transfers.

Companies that have confirmed orders from credit worthy end customers can utilise the facility in conjunction with Berkeley’s invoice finance product.

As part of Berkeley’s comprehensive solution the facilities can be utilised to manage the 
full supply chain, through sourcing, quality control, shipping, insurance, customs clearance and delivery. Additionally the facility can also fund VAT, duty, freight and marine insurance.

Prerequisites to a combined product transaction

• Berkeley will register a full fixed and floating Debenture on the Client.
• Credit Insurance is obtained on the End Customer.
  This will protect outstanding monies owed to Berkeley in case of End Customer insolvency.
• Customer is formally notified of new financing agreements in place between Berkeley and Client and the legal assignment of all debts and payments to Berkeley.
• Confirmation in writing by freight forwarder that goods will be held to Berkeley’s order at all times. This will further extend security and control over the transaction and the goods.

The Purchase Finance product can assist clients to achieve the following:

Purchase finance only product

Berkeley can offer clients, who have a strong balance sheet and are credit worthy, a purchase finance facility to enable purchases from suppliers.

Once a credit limit is established on the client company, Berkeley are able to issue purchase orders and if necessary open Letters of Credit in favour of the suppliers to agreed terms and effectively provide clients with open credit terms. This a cost effective method of funding special opportunities at times when a clearing bank may perhaps be reluctant to extend overdraft or loan facilities.

Prerequisites to a purchase only transaction

• Credit insurance obtained on the Client. This will protect outstanding monies owed to Berkeley in case of Client insolvency.
• Berkeley will register a full fixed and floating Debenture on the Client.
• Confirmation in writing by freight forwarder that goods will be held to Berkeley’s order at all times. This will further extend security and control over the transaction and the goods.