Sources of Finance for International Trade

by Jean Winget - Updated September 26, 2017

The financing of international trade operations is similar to domestic finance operations. Banking, government subsidies and special lines of credit are some means to obtain financial assistance. Requesting sources for financing international trade is like any other financial funding request, with additional concerns over country risk and legal issues. A working plan of the company portfolio is necessary, as well as an excellent understanding of the trade countries' export and import needs.

Trade Market Focus and Risk

Knowledge of your trade or export business's financial viability in your region of interest is a primary focus. An in-depth understanding of the legal differences among financial terms and cultural expectations between countries is also imperative. The National Export Initiative is a broad-based trade and finance program by the U.S. government developed to assist with financial planning and development of foreign trade.

Legal Plans of Action

Companies should be well versed in the trade language of the country they are doing business with. Legal barriers to trade negotiations need to be considered as well as the contractual implications. Political problems and sanctions are impediments to financial security. Some countries and financial institutions may require capital deposits on goods and services shipped and retained at port. To obtain country-specific legal information for business plans, the Office of International Investment Strategies and Trade Agreements is helpful.

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Export Country Demographics

Understand the trade partner and network in order to receive premium financial information. Trade Stats Express, an online data information tool kit to enable research and graphic display, is helpful for writing a business plan, enhancing banking proposals and understanding the more complex demographics of your trading partner. This software will assist on many levels of your research, including questions regarding trade purchasing optimization. This software is managed by the U.S. Office of Industry Analysis, at Export.gov.

The Life Jackets

The international financial analyst should clarify the series of "what if's" of operational risk; which you will not encounter in a domestic scenario. Remember you may be negotiating in two or three currencies; language barriers and expectations of merchandise appraisals at delivery can best be managed by an experienced trade partner. For additional assistance, the U.S. Commerce Department recommends taking advantage of the Financial Assistance Center. The center offers workshops to consider many financial concerns in international trade.

About the Author

Based in New York City, Jean Winget began writing professionally in 1995. She specializes in economics, business reviews, forecasts and financial mathematics. Winget has written for Citibank and been published in a zine. She is pursuing a graduate degree in mathematics/finance from the City University of New York's Graduate Center.

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