What is Alternative Trade Finance?
The limited capacities of the banks have led to the emergence of Copula Stark to introduce alternative trade finance solutions to SMEs. We are willing to get involved with transactions that are not in the interest of traditional banks where they have certain pre-requisites that certain companies could not meet.
As banks will remain confined to calculating probability of default (PD) risk ratings as the main driver of their risk appetite grids, on the other hand, while still looking at the size of the operation, we will take most comfort from the actual underlying flow, its logistics and the risk mitigation structure in place, meaning how the contracts, underlying goods under them and related cash flows can be sufficiently ring-fenced in order to ensure repayment of the exposure we undertake.
As traders ourselves, the skills set we offer is often different from those of traditional, often generalist, bankers. With a “can-do” attitude, we will be accustomed to visiting relatively unknown firms without a well-known brand and often based in locations that are off the beaten track.
FACTORING
Usually MNCs and GLCs pay their suppliers on credit term basis. With factoring services, clients borrow money against the invoices. Factoring helps businesses improve cash flow, pay employees and suppliers on time, and re-invest in the business earlier than they could.
PRE/POST SHIPMENT SOLUTIONS
Often companies who received orders with Letter of Credit (“LC”) or Standby Letter of Credit (“SBLC”) could not access to pre-shipment capital from financial institutions if they do not satisfy certain requirements. By receiving LC or SBLC, it essentially represents a promise from the buyer’s bank ensuring payment on the timely delivery of purchased goods. We assist our clients in pre and post shipment capital needs by leveraging on the LC and SBLC issued by their customers.
BRIDGE FINANCE
In a form of a short-term investment, is an interim financing option favoured by corporates to solidify their short-term position until a long-term financing option materialize often by a financial institution. Usually backed by a collateral which can be in form of tangible assets or title of goods.
JOINT-VENTURES/JOINT-OPERATIONS
At times, Copula Stark set up joint-ventures (JV) or joint-operations (JO) entities to accommodate and support traders who has limited access to capital. With our in-house structuring team and finance specialists, we JV and JO with uprising traders or wholesalers so both parties could complement each other.