Import Financing Structures

Import Financing Structures#

Import financing options: trust receipts (bank pays supplier, you sell goods and repay — 30-180 day terms), bankers' acceptance (bank-guaranteed time draft, negotiable at discount), inventory finance (borrow against imported goods in warehouse), and buyer's credit (overseas ECA lends to you directly to buy their country's exports). Each serves different stages of the import cycle.

Trust Receipt Financing#

Process: you apply for LC, bank opens LC and pays your supplier, goods arrive and bank releases documents under trust receipt, you sell goods, and repay bank within agreed period (typically 90-180 days). Interest: bank base rate + 2-4%. The trust receipt means the bank technically owns the goods until you repay. Default: bank can seize and sell the goods. This is the most common import financing method.

Matching Finance to Your Cash Conversion Cycle#

If your import-to-sale cycle is 90 days: use 90-day trust receipts. If it's 180 days (slow-moving goods): negotiate 180-day terms or use inventory finance for the storage period. The financing tenor should match your cash conversion cycle — borrowing for 90 days when goods take 120 days to sell creates a 30-day cash gap you'll need to cover from other sources.

• Fund your imports without tying up working capital — financing options from trust receipts to inventory finance