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Trade finance
 
 
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Trade finance is related to international trade. While a seller (the exporter) can require the purchaser (an importer) to prepay for goods shipped, the purchaser (importer) may wish to reduce risk by requiring the seller to document that the goods have been shipped. Bank
Bank

A bank is a financial institution whose primary activity is to act as a payment agent for customers and to borrow and lend money. It is an institution for receiving, keeping, and lending money....
s may assist by providing various forms of support. For example, the importer's bank may provide a letter of credit to the exporter (or the exporter's bank) providing for payment upon presentation of certain documents, such as a bill of lading
Bill of lading

A bill of lading is a document issued by a common carrier, e.g. a ship's master or by a company's shipping department, acknowledging that specified good s have been received on board as cargo for conveyance to a named place for delivery to the consignee who is usually identified....
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Trade finance is related to international trade. While a seller (the exporter) can require the purchaser (an importer) to prepay for goods shipped, the purchaser (importer) may wish to reduce risk by requiring the seller to document that the goods have been shipped. Bank
Bank

A bank is a financial institution whose primary activity is to act as a payment agent for customers and to borrow and lend money. It is an institution for receiving, keeping, and lending money....
s may assist by providing various forms of support. For example, the importer's bank may provide a letter of credit to the exporter (or the exporter's bank) providing for payment upon presentation of certain documents, such as a bill of lading
Bill of lading

A bill of lading is a document issued by a common carrier, e.g. a ship's master or by a company's shipping department, acknowledging that specified good s have been received on board as cargo for conveyance to a named place for delivery to the consignee who is usually identified....
. The exporter's bank may make a loan (by advancing funds) to the exporter on the basis of the export contract.

Other forms of trade finance can include export credit insurance, export factoring
Factoring

Factoring can refer to the following:* A form of commercial finance - see factoring ; structured settlement factoring transaction* Factorization, a mathematical concept...
, forfaiting
Forfaiting

In trade finance, forfaiting involves the purchasing of receivables from exporters. The forfaiter will take on all the risks involved with the receivables....
 and others. In many countries, trade finance is often supported by quasi-government entities known as export credit agencies that work with commercial banks and other financial institutions.

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