Understanding Import Financing And How It Works

Many businesses these days involve importing goods from another country, especially Hong Kong or China. Importing and exporting from another country can be a complex transaction process. Import financing is tailored to provide the funds for businesses for the purpose of purchasing goods from another country in another one. If you want to learn more about this trade financing, then read on.

Import/Export Trade Financing

If you are in the Import and export trade industry, you probably have already heard about this. This type of financing basically handles the expenses associated with receiving and sending food to and from various companies in different parts of the world. This trade financing provides the funds in advance so that the transaction of exchanging these goods would be made possible.

How Import/Export Financing Works

There are parties involved, at least three of them to make the trade flow process possible – the importer, the exporter, and the lending institution. Each of them plays a vital role in the process. The importer is the customer, the exporter is the company that is selling, and the lending institution is the one financing this entire operation.

Once there is a sales agreement between the seller and the buyer, the lender will then provide the funds for the transaction to push through. There is a difference in the process between the import financing and export financing. 

  • Export Financing. This type of trade financing is when the sellers’ bank sends the funds for the transaction to proceed as a deferred payment.
  • Import Financing. This is when the buyers’ bank pays the exporter for the transaction to push through. Then, the importer will repay the lender the total amount owed – principal and interest. 

Import Financing With DBS SME Banking

In need of import financing? Then you should check out what DBS SME Banking can offer. This will ensure a cash flow to help you focus on growing your business through their Import Financing Solutions. This is currently one of the most preferred import financing methods by many all across the globe/

What makes it different from others is that it provides a customizable financing plan that would meet your business needs. Also, the application is quick and easy. All you need is to submit your application through DBS IDEAL. For you to be eligible for the application, you must have a credit facility with DBS. If you have, then you can proceed with your application.