Registered office: 765 Brickell Bay Drive, Miami, FL 33131, USA — EIN 32-0678594
Logo Fintech SCBFintech SCB
Monitor

Trade finance: instruments to fund import and export

7 min readUpdated 2026-08-14

In cross-border trade the seller wants payment before shipping and the buyer wants goods before paying. Trade finance resolves that tension by placing a bank between the parties and turning documents into payment certainty.

Go to the serviceDownload the brochure

Letters of credit and documentary collection

Under a documentary credit the bank pays against compliant documents: formal compliance matters more than the goods actually delivered. Documentary collection is cheaper but does not guarantee payment, so keep it for long-standing counterparties.

  • Irrevocable, confirmed, sight or usance credits
  • Required documents: bill of lading, invoice, certificates
  • Document discrepancies: prevention and cure

Guarantees, standby credits and insurance cover

Standby letters of credit and bank guarantees cover default rather than settling ordinary payment. Export credit insurance completes the picture on country risk and on the buyer's commercial risk.

  • Performance, advance payment and bid bonds
  • On-demand standby credits under URDG/ISP98
  • Export credit and political risk policies

Liquidity: discounting, factoring and forfaiting

Selling on 90 or 180 day terms need not lock up cash: receivables can be assigned without recourse or accepted drafts discounted. Judge the cost as an effective annual rate on the cash actually received, fees and document charges included.

  • International factoring with or without recourse
  • Forfaiting of medium-term receivables and draft discounting
  • Inventory and purchase-order finance

Key takeaways

  • In documentary credits, compliant paperwork beats good faith.
  • Guarantees cover default; they are not a payment instrument.
  • Compare the cost of trade finance with the cost of the risk it removes.

Frequently asked questions

When is a confirmed letter of credit worth it?
When the risk lies with the issuing bank or the buyer's country: confirmation moves the payment obligation to a first-tier bank in the seller's country.
What is the difference between factoring and forfaiting?
Factoring assigns short-term, often revolving trade receivables; forfaiting discounts single medium-term receivables without recourse, usually backed by notes or bank avals.

Want an opinion on your specific case?

Fintech SCB advisers review your personal or corporate position and recommend the most efficient structure, confidentially.

Request a consultationGo to the service

Keep reading

International private banking: how it works and who it suitsTrusts and foundations: when you need them and how to set them up

Liquidity, regularization and crypto conversion

Five operational areas we handle for individuals and companies, with documented procedures, correspondent banks and international tax advice.

Liquidity management

Cash-flow planning across personal and corporate accounts, selection of custodian banks, holding currencies and short-term instruments to protect purchasing power.

Typical example: A company collecting in three currencies centralises cash in a multi-currency account and sets a periodic conversion plan to cut FX exposure.

Liquidity regularization

Voluntary disclosure of undeclared capital and liquidity: reconstructing the source of funds, building the document file, and liaising with the bank and tax advisers in each country involved.

Typical example: Funds held abroad for years are consolidated into a file with a complete banking trail, so they can be moved to a declared account.

Investment sanctions management

Compliance screening of counterparties, banks and financial instruments against EU, OFAC and local sanctions lists, plus restructuring of frozen or at-risk portfolios.

Typical example: A portfolio holding restricted securities is mapped position by position and reorganised into equivalent unrestricted instruments.

Cash to crypto

Converting cash into digital assets through regulated venues, with KYC/AML checks, custody arrangements and tax reporting of the position.

Typical example: Part of a company's cash is converted into digital assets via a regulated exchange, with institutional custody and monthly accounting statements.

Crypto to cash

Liquidating digital assets into bank accounts: proof of source, choosing a bank that accepts the credit, capital-gains calculation and filing.

Typical example: A multi-year crypto position is cashed out in tranches to a European account, with the purchase chain documented and a capital-gains schedule.

Let's discuss your case

Confidential preliminary review: describe the transaction and receive the documentation path and estimated timeline.

Request adviceMore on regularization