Rosenthal's Yang and Clement Explore Trade Finance with Commercial Factor Magazine

After more than a year of massive supply chain disruption, it is no longer about waiting for things to get back to normal. Instead, importers and exporters should be looking for solutions that can aid them in the short and long term. Trade finance/export financing is one such solution. Ying Yang and Peter Clement of Rosenthal & Rosenthal discuss this financing instrument, how it can benefit importers and their factors, and where the marketplace is going in 2023.

Let’s start with the basics. What is export financing/trade finance?

Ying Yang: Trade finance is a broad term and could mean different things to different individuals. Essentially, trade finance provides working capital solutions to help companies at various stages of the trade cycle, from facilitating inventory purchases to funding and collecting accounts receivable. It is generally a much more flexible financing instrument and can also be highly specialized. The purchase order (PO) finance offering at Rosenthal serves as a short-term financing instrument to allow companies to purchase raw materials or finished goods that have purchase orders or known sales opportunities. It is a non-dilutive option for business owners who do not want to give up equity and it works in conjunction with an accounts receivable lender, whether with Rosenthal’s own factoring and asset-based lending divisions or third-party lenders and banks.

Peter Clement: Export factoring is an important financial product — particular in the current environment — that allows a business to sell its foreign accounts receivable to a third party in return for working capital, credit protection, ledgering and collection services. Under the transaction between both parties, the factor would pay the amount due on the invoices minus its commission or fees.