What is Trade Finance?

Trade finance is a range of specialist financial products designed to facilitate international and domestic trade by bridging the gap between when a buyer pays and when a supplier receives payment. It includes letters of credit, import finance, export finance and supply chain finance — reducing payment risk and enabling businesses to trade internationally without tying up working capital in goods in transit. Seven Hills Capital Group works with specialist trade finance providers to find the right structure for your transaction.

You identify the trade finance product appropriate to your transaction

The finance provider guarantees or funds the transaction on your behalf

Your supplier is paid promptly — reducing their risk and often improving your commercial terms

You repay the finance provider once goods are sold or the transaction completes

Pros

• Enables international trade that would otherwise be impossible due to cash flow timing gaps
• Reduces payment risk for both buyer and seller in cross-border transactions
• Allows UK businesses to offer competitive payment terms to overseas customers
• Can improve supplier relationships through prompt and guaranteed payment

Things To Consider

• More complex than standard business finance — multiple parties and documentation involved
• Letter of credit arrangements can involve significant paperwork and process
• Cost can be significant for smaller individual transactions
• Requires specialist lenders with genuine international trade expertise

How Seven Hills Capital Group Could Help Your Business

Every business situation is different. The illustrative examples on our case studies page are based on common scenarios we see from UK business owners and landlords - showing how the right finance product, found through a whole-of-market broker, can make a real difference.

What is a letter of credit and when do I need one?

A letter of credit is a bank guarantee that payment will be made to a supplier once agreed conditions are met. It is used in international trade where buyer and seller have no established relationship and the seller requires payment security before shipping goods. Seven Hills Capital Group will confirm whether a letter of credit is the right instrument for your transaction.

What is import finance?

Import finance provides funding to pay overseas suppliers before goods arrive in the UK and before your customers pay you. The facility bridges the gap between paying for stock and receiving payment — typically 60 to 120 days. It keeps your working capital intact throughout the import cycle.

What is export finance?

Export finance supports UK businesses selling goods or services overseas. It includes export and import loans and invoice finance against export invoices, pre-shipment finance to fund production, and trade credit insurance to protect against overseas buyer default. UKEF also provides government-backed support for UK exporters.

How much does trade finance cost?

Trade finance costs vary by product, transaction size and risk profile. Letters of credit typically cost 0.5–2% of the transaction value. Import and export loans are priced similarly to standard business loans. Seven Hills Capital Group will provide a full cost comparison before you commit to any structure.

Do I need to be an established exporter to access trade finance?

No. Trade finance is available to businesses at various stages of their international trading journey. Some government-backed schemes through UK Export Finance are specifically designed to support UK businesses entering export markets for the first time — Seven Hills Capital Group will identify which schemes apply.