Reply To: State the differences between export and trade finance.

[George Clive]

Export and trade finances can be used interchangeably. But it is essential to understand the differences to get the desired results. Trade finance is used in financing exports and imports, encapsulating purchase order finance, invoice finance, off-balance sheet lending and letters of credit. Generally, trade finance is used in cross-border trade, but it is also possible in domestic trade. Many people view it as having suppliers and purchasing orders and financing the trade using lender’s funds instead of realizing that it is a financing mechanism and is not popular in the market.