OUR SERVICES

THE LOGIC OF TRADE FINANCE

To start we require a local demand of some specific goods which can not be sufficiently produced in the local market, eg automobile spare parts. The said demand is brought to a specialized trader and such trader contacts the selling company and a trade financing institute eg TFF in order to bridge-finance the trade until final payment by the buyer.

The trader is expected to grant an irrevocable Letter of Credit, LC, to his bank to cover the repayment of money lent out. This happens automatically as soon as funds are received from the buyer. In case no LC is provided other securities have to be accepted before the loan agreement can be signed.

A GOOD PURPOSE INVESTMENT

Only critically needed consumer goods (eg medical equipement / medicine, spare parts, food additives etc) for civil use are in the scope of TFF. TFF therefore helps to avoid further shortage of strategic goods supplied to the civil population. In fact TFF acts, behind the scenes, as banker to traders for goods desperately needed in a specific market. Irrevocable letter of credits, LCs, issued by renown banks are by far the most common security. Alternatively enforcable promissory notes/bills of exchange can be accepted as well in some cases. Aside that TFF is only dealing with renown trade agents and focusing on strategic products assigned to buyers in key industries. TFF acts offshore with non local traders. Therefore trade deals are purely done between two foreign companies.

A TYPICAL TRADE – WITH CARIBBEAN

Foreign Trader: Trades are financed with foreign traders only. With some few countries TFF is more flexible but none national traders are preferred.

Strategic importance: Trader asks TFF for financing a specific product to be imported to Caribbean. The product in question must be determined by TFF’s team to be of key strategic importance eg medication, milk powder, spare parts for the rice or sugar harvesters.

Last in, first out: The financing is granted if and when the sale to the Caribbean purchasing agency has been signed and an irrevocable payment instrument is in place. Disbursement is made only with the irrevocable instructions to the traders (foreign) bank, to repay TFF upon receipt of said funds from Caribbean. This way, TFF’s money is last in and first out.

Amount to finance: 85% is the maximum share that TFF will agree to participate, though this is often as low as 70%. Yields: Interest is calculated by number of days. An extra 15 to 30 days on the agreed repayment date is taken into account. With payment from Caribbean TFF receives principal plus part of the profits. Only after the trader gets the remaining share.

TFF STRUCTURE AND DECISION PROCESS