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Trade Finance

Simply put, bring us a trade and we will endeavour to finance it. We will cut through the bureaucracy and provide you with a pragmatic, timely and realistic solution. OCI is committed and passionate about making this product available and accessible to as many trades as possible - we will review your proposal with an open mind and optimism.

We are able to finance international and domestic trades utilising Letters of Credit (LCs), Back-to-back Letters of Credit (B2B LCs) and Pre-export Finance. As a trading company ourselves we have the intuition, drive and understanding to deliver and support trades. This solution is suitable for, but not restricted to, individual traders and SMEs.
Steps:

Some key benefits:

  • Fast turnaround on proposal review.

  • Less restrictive on trade terms, commodities and applications.

  • Increased flexibility.

  • Reduce risks involved with international trade.

  • Simple solution.

  • Direct, transparent and real-time communications with OCI.

  • Not restricted by balance sheet or company size.

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Trade Finance products that OCI can support and facilitate:

Advantages of using an LC product:

  • Legally binding in almost all (up to 175) countries worldwide.

  • Conduct business and be certain that all agreed goods will be received and that all payments will be made as both are contingent on each other.

  • Provides full contractualized clarity of the transaction being undertaken.

  • Flexibility across a range of LC types.

  • Secures access to the global trading market.

  • Risk of, for example, non-payment is placed on the intermediary, not the buyer.

An Overview:

International trade has occurred for centuries and in a range of forms, but trade finance is often credited with its accelerated growth over recent years. Trade finance is the umbrella term of the financial products provided by an intermediary that are utilised to facilitate international commerce. For importers and exporters this means that they are able to transact, as the third party removes payment and supply risk.

Typically the parties involved in such a trade may include:    

  • Importer

  • Exporter

  • Banks

  • Trade finance companies

  • Insurers

  • Export credit agencies

Trade finance is considered different to other, more general, financial solutions as it can mitigate  international trade risks including currency fluctuations, political factors, non-payment and the creditworthiness of one (or more) of the parties involved. 

Letters of Credit (LCs)

Back-to-Back Letters of Credit (B2B LCs)

Pre-export Finance

These are financial instruments used to reduce risk between parties engaged in international trade. Its function is to ensure that the payment and delivery of goods will be fulfilled between a buyer and a seller.

The appointed bank guarantees that payment to the seller will be made for the goods that are shipped. Furthermore, the buyer is also protected in the trade as payment will not be made to the seller unless the specific terms contained within the LC are met by the seller. Consequently, both parties have to honor the transaction for it to be completed and it provides full clarity for all involved.

These may also be referred to as ‘mirrored’ LCs. This is the process of using 2 LC arrangements together to finance a, typically, international transaction and helps facilitate trade that, without such a solution, may not be viable as each party would not be able to verify each others creditworthiness.

More broadly, this results in the buyer’s and intermediary’s credit security/worthiness is substituted for the two issuing banks credit which in turn enables the trade to be facilitated.

Based on previous orders from buyers, as a funder we can provide funds to businesses which in turn can utilise this capital to manufacture and supply goods to the buyer. More specifically this is typically used when manufacture or commencement of trade is acting as a barrier and must be paid by the lender or the buyer before any further funds can be provided. This product is designed to enable a sufficient level of cash flow and liquidity to support the product and thus trading of the goods/services, particularly in the context of large capital-intensive productions.