Trade and supply chain finance
What is trade finance and how does it help importers and exporters?
By Sam Wells · 21 July 2026
Trade finance funds the gap between paying a supplier and getting paid by your customer, often across borders. It covers tools such as letters of credit, import finance and export support, so you can buy stock or fulfil large orders without tying up all your cash. It is especially useful for importers with long lead times.
Trade finance funds the cash gap in buying and selling goods, especially internationally. You often have to pay a supplier, sometimes abroad and well in advance, long before your own customer pays you. Trade finance bridges that gap so the deal is not limited by your cash on hand.
It is really a family of tools, including:
- Letters of credit, which give a supplier a bank-backed promise of payment, so both sides can trade with confidence.
- Import finance, which funds the purchase of stock or goods you are bringing in.
- Pre and post-shipment finance, covering the stages of an export order.
- Export support, including government-backed schemes for UK exporters.
It is particularly valuable for importers with long lead times, where goods are paid for and shipped weeks or months before they can be sold on, and for businesses fulfilling a large order that would otherwise swallow their working capital.
Trade finance also pairs naturally with invoice finance: trade finance covers the front half of the cycle, buying and importing, and invoice finance covers the back half, waiting to get paid. We can structure them together where a deal needs both.
Written by
Sam Wells
Director, FundingLinks
Co-founder and Director at FundingLinks with over 15 years of leadership experience in commercial finance. He works directly with SMEs across the UK to structure funding across the whole lender market.
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