Trade Finance For Transactions On Cash In Advance Terms
Trade Finance For Transactions On Cash In Advance Terms
When This Solution Is Appropriate
- Suppliers require full or partial advance payment prior to production or shipment.
- Projects require milestone deposits that would otherwise constrain working capital for several months.
- The counterparty agrees to a bank undertaking in place of a cash deposit under defined conditions.
- The buyer requires performance protection and a controlled method for the release of funds.
What We Arrange
- Term loan or revolving facility sized to the deposit and issuance costs.
- Receivables backed facility with assignment and controlled collection accounts.
- Inventory or in-transit title facility with collateral management where appropriate.
- Advance Payment Guarantee under Uniform Rules for Demand Guarantees Publication Number 758.
- Standby Letter of Credit for performance or refund under International Standby Practices Publication Number 98.
- Documentary Letter of Credit with red clause or green clause where a controlled pre-shipment advance is acceptable.
- Escrow with milestone releases linked to independent inspection or factory acceptance tests.
- Clear Society for Worldwide Interbank Financial Telecommunication message map for issuance and reimbursement.
- On-board transport documents and insurance aligned to Incoterms and risk transfer.
How The Structures Work
- Contract Review. We assess the sale or project contract, Incoterms, milestones, and insurance. We confirm the governing rule set for the instrument selected: Uniform Customs and Practice for Documentary Credits Publication Number 600, International Standby Practices Publication Number 98, or Uniform Rules for Demand Guarantees Publication Number 758.
- Funding Route. We set a facility to meet the deposit requirement. Options include a cash-collateralised loan, a receivables facility aligned to the outbound cash cycle, or an inventory and title route when the commodity and storage conditions are suitable.
- Bank Undertaking In Lieu Of Cash. Where the supplier accepts an undertaking, we draft precise wording for an advance payment guarantee or a standby letter of credit that triggers repayment on non-performance or non-delivery.
- Evidence And Release. We define the evidence for each release such as production records, independent inspection certificates, factory acceptance tests, and transport documents with coherent dates and routes. Presentation periods and original document counts are set to match logistics.
- Reimbursement And Repayment. We agree the direct payment path or the reimbursing bank path and the value dates. The loan is repaid from assigned proceeds when the goods are delivered or from operating cash flow.
Risk Mitigation And Control Framework
- Sanctions, know your customer, and beneficial ownership checks on all parties and key service providers.
- Advance Payment Guarantee or Standby Letter of Credit with clear events of default and unambiguous drawing conditions.
- Escrow or pledged account structures where cash must be held prior to release.
- Insurance with lender loss payee and endorsements matched to transport and storage risks.
- Independent inspection or factory acceptance tests for milestone releases.
- Assignment of proceeds, controlled collection accounts, and notice to counterparties.
- Hedging policy where price or currency risk could impair repayment capacity.
- Stop-fund triggers tied to production delays, inspection failures, or document discrepancies.
Process From Mandate To First Release
- Assessment. Review of the contract pack, transport plan, factory capacity, and counterparties. Confirmation of acceptable instruments with the supplier.
- Structure. Selection of the funding and security package including loan type, tenor, reserves, undertaking wording, evidence list, and release schedule.
- Underwriting Pack. Cash flow model, milestone calendar, collateral narrative, draft wording for guarantees or credits, and a concise data room.
- Distribution. Targeted approach to banks and funds active in this segment with the objective of securing comparable proposals for a clean file.
- Negotiation. Pricing bands, covenants, fees, and documentary language negotiated to a clear term sheet and draft instruments.
- Closing And Execution. Conditions precedent, account control, issuance of the guarantee or credit, escrow or pledge activation, and monitoring to the first release.
Commercial Terms
- Lender Terms. Reference rate plus spread on drawn amounts. Commitment charge on undrawn lines where applicable. Fees for confirmation where a confirmed letter of credit is used. Standard advising and Society for Worldwide Interbank Financial Telecommunication message charges.
- Our Terms. Retainer of nine thousand six hundred fifty United States dollars on engagement. Success fee of two and a half percent of face amount for letters of credit or standby letters of credit arranged, or three percent of any gap capital raised for the advance. Minimum success fee fifteen thousand United States dollars, payable at issuance or first release. Escrow is available.
- Negotiation Objectives. Competitive pricing for the utilization period, removal of non-core fees, and covenants that are measurable and consistent with operations.
Eligibility And Initial Documentation
- Verifiable contract with a defined production or shipment schedule.
- Directors and beneficial owners available for know your customer checks.
- Willingness to assign proceeds, operate controlled accounts, and accept reasonable inspection and reporting rights.
- Transactions that do not conflict with sanctions or applicable law. No paper trading and no crypto assets.
- Contract pack with Incoterms, technical specifications, and delivery timetable.
- Production and logistics plan, including proposed carriers or warehouses and insurance evidence.
- Corporate documents, group structure chart, and beneficial ownership details.
- Twelve months of bank statements and the latest financial statements.
- Acceptable wording for the guarantee or credit if the supplier has a template. If not, we will draft.
Frequently Asked Questions
Request A Structure For Cash In Advance Trade
Please share the contract pack, the production or shipment plan, and target dates. We will respond with a proposed route, lender interest, and next steps.
Request A Term SheetThis page addresses corporate users. Nothing here is a commitment to lend. All services are subject to know your customer checks, anti-money laundering requirements, sanctions compliance, and lender approvals. We act on a best-efforts basis and all lender contact is chaperoned.
Get Started With Us
Submit Your Deal & Receive a Proposal Within 1-3 Working Days
Submit your deal using our secure intake form, and receive a quote within 1-3 business days. Existing clients can connect with their relationship manager through our secure web portal.
All submissions are
promptly reviewed, and all communications are conducted through the intake form or the client portal for a seamless and secure process.
Thank you for considering working with us. A nominal fee of US$500 is required upon completion of each form. This fee covers the time and effort we invest in reviewing your submission and crafting a thorough proposal. We receive numerous inquiries and prioritize those that carry this fee, ensuring serious applicants receive prompt attention.
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