Trade finance is used when financing is required by buyers and sellers to assist them with the trade cycle funding gap. Buyers and sellers also can also choose to use trade finance as a form of risk mitigation.

Trade finance includes Letters of Credit (LCs), export finance and credit agencies, receivables and invoice finance, as well as bank guarantees.

It includes:

• Lending facilities
• Issuing Letters of Credit (LCs)
• Export factoring (companies receive funds against invoices or accounts receivable)
• Forfaiting (purchasing the receivables or traded goods from an exporter)
• Export credits (to reduce risks to funders when providing trade or supply chain finance)
• Insurance (during delivery and shipping, also covers currency risk and exposure)