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Conflicting Needs

The Need for Risk Mitigation and Finance
  • Stephen A. JonesEmail author
Chapter
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Abstract

The conflicting needs of seller and buyer are examined in the context of international trade. The seller is concerned with credit and liquidity risk and therefore requires payment as soon as possible, whereas the buyer wishes to pay as late as possible to ensure they receive the correct goods and to preserve their cash.

Because the risk mitigation and financing solution must address the needs of both parties, the perspectives of the seller and buyer are considered. This chapter describes how the use of trade products such as documentary letters of credit, collections and demand guarantees can provide a solution which bridges the gap between both commercial parties.

Keywords

Advance payment guarantee Credit risk Letter of credit Liquidity risk Trade credit Trade cycle 

Copyright information

© The Author(s) 2019

Authors and Affiliations

  1. 1.AXS Trade Finance Ltd.Solihull, West MidlandsUK

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