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Trade Finance Global (TFG) is delighted to announce the official publication of a new trade and export finance guide in partnership with the Department for International Trade (DIT) and UK Export Finance (UKEF).

To get more information about the guide, TFG spoke with Mark Abrams, Global Head of Trade and Receivables Finance, TFG.

The trade finance gap recently reached $1.7 trillion in 2020, showing no signs of abating, with small and medium-sized enterprises (SMEs) being disproportionately affected.

This new guide aims to disseminate the fundamental pillars of the trade and export industry, in order to make information on this subject more easily accessible to those who are disproportionately most affected.

What is trade and export finance: how can this new guide help you?

In order to better understand the content of the guide, it is first important to understand the broader international business landscape.

International trade is the backbone of the economy, with 80-90% of cross-border trade requiring financing.

In turn, trade and export finance gives companies the freedom to free up working capital from their receivables or inventory, allowing them to export to international markets.

Export financing

Export finance is an umbrella term for many different financing tools and instruments that businesses use when transacting across borders.

More generally, export financing facilitates transactions by providing importers and exporters with the financing they need.

The result: minimized gaps between orders placed and final payments, greasing the wheels of the entire supply chain in the process.

This newly published guide includes an overview of the most common export finance risks, where to go for real and practical help, and the current landscape of trade finance digitization.

Also included is a glossary of industry terms, an overview of the process involved in obtaining finance and how trade finance can help.

How can SMEs benefit from this guide?

SMEs represent around 90% of all existing businesses, generating more than half of the jobs worldwide.

Despite their overwhelming presence, SMEs account for a staggering 40% of trade finance rejections, far more than their share of applications.

Without the expertise or know-how, the field can seem daunting.

With that in mind, this guide outlines the many options available to SMEs, with support from UKEF, DIT and TFG.

A guide to the new business landscape

The last 18 months have been marked by a host of major macroeconomic and geopolitical shifts, creating food shortages, record inflation rates and an energy crisis.

As a result, the trade finance industry has become enveloped in more risk, increasing uncertainty in global trade.

The effects of this development have led to an increased need for corporate funding and a reduced desire to provide funding to liquidity providers.

Given this complex and multi-faceted backdrop, this guide can hopefully provide an anchoring reference for tackling these stormy seas.

The future of trade and export finance

The trade finance landscape is changing rapidly. While this offers some great opportunities, it can often leave less experienced browsers in the market in the dark.

The instruments provided in the guide can therefore help exporters make informed decisions, taking into account all the factors in today’s unpredictable market.

The guide is a great resource and not secure. Those looking to learn more can do so on TFG’s Export Finance Hub. The TFG website also offers a range of educational materials on trade finance, including articles, podcasts, videos and webinars.