Convenient pre-financing of the purchase of goods

As a non-bank financial service, finetrading is used to finance working capital. The individual participants act as intermediaries between the supplier and the buyer and finance the orders negotiated. The finetrader pays the supplier’s invoice to the seller directly after delivery of the goods. At the same time, the finetrader grants the customer an extended payment period of up to 120 days.

Finetrading can be used as a freely available credit line, similar to an overdraft facility. This creates a trilateral relationship involving the finetrader, the customer and the supplier. The physical transport of goods and the bilateral negotiations between the buyer and the supplier remain unaffected by the trilateral relationship.

This type of financing can be particularly beneficial for companies in growth or special situations.

The advantages of finetrading
Finetrading allows for the uniform, matching-maturity financing of goods/raw materials that the entrepreneur needs to process orders. Finetrading can play a crucial role in covering business peaks for companies, giving them an opportunity to generate additional growth. Finetrading pre-finances 100% of the goods, without the usual haircuts that banks apply to goods in conventional working capital financing arrangements (e.g. master overdraft facility).

Direct inflow of liquidity
This gives suppliers the opportunity to exploit the liquidity inflow for business purposes immediately, while the finetrading user benefits from additional time to make the final payment. The finetrader charges individual fees for this service which depend, in particular, on the creditworthiness and duration of use. These fees generally consist of the discount negotiated and deferral fees calculated based on the exact number of days.

Advantages for commercial banks in cooperation with finetraders

  • The bank can support corporate clients in challenging growth situations by cooperating with a finetrader.
  • The potential default risk for the commercial bank is reduced thanks to commercial credit insurance, which forms the basis for security in this business model.
  • By financing order peaks, companies can exploit growth potential that they would not have been able to exploit with conventional bank financing. In this scenario, the principal bank also benefits from additional cash flows generated by finetrading.
  • The working capital lines of the principal banks can be relieved by finetrading.

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