Benefits of using trade finance during high levels of currency volatility

There are many different factors which can create a high level of currency volatility in the global markets. From ongoing political instability to fluctuations in supply and demand, all sorts of things can cause currency volatility and it will have a big effect on many industries.

During high levels of currency volatility, many businesses will take action to reduce the impact it could have upon their firm. Using trade finance through MarketInvoice is one popular option and it provides many benefits during such uncertain times for various reasons.

It offers flexibility

Using trade finance services offers plenty of flexibility. You can pay cash up front to suppliers and others wherever they are based in the world. This ensures your clients and customers are not left disappointed, with the payment able to be made in the supplier’s local currency, which removes some currency risk.

Depending on the terms agreed upon, you will have a few weeks or maybe even months to settle the balance. The flexibility to have access to as much or little finance you need and generous repayment terms, means you can adapt the agreed trade finance based on the current currency values and future fluctuations.

Maintains a smooth cash flow

54% of SMEs believe that cash flow problems are the biggest obstacle when it comes to achieving growth. When currencies are volatile this makes creating a smooth cash flow even trickier, especially as transaction and trade costs are increased, meaning with a lack of funds from customers the cash flow situation can grow worse.

Trade finance offers a good solution by providing all the necessary funds to cover late payments, whatever the existing currency values may be. Along with the flexibility, it means you can easily adapt incomings and outgoings to form a good cash flow during and after high levels of currency volatility.

Creates safer trading

Exporting and importing goods when currency volatility is high can be risky for a lot of businesses. If you begin importing from suppliers at a good rate but then by the time goods are being exported currency values have increased, you can end up making a loss.

Using trade finance adds an element of safety to the process. Suppliers receive a security guarantee, which improves relations when using trade finance from a FCA registered company. Plus, you will be in a better position to negotiate prices. So, if currency volatility is high, consider using trade finance to protect your company.