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Understanding your financial needs: Do you really need to borrow?
- Author: International Trade Centre
- Main Title: How to Access Trade Finance
- Publication Date: April 2010
- DOI: https://doi.org/10.18356/e2328996-en
- Language: English French, Spanish
All businesses require financing. This is particularly true if they are engaged in international trade. The trade cycle or transaction (including the time to collect receivables) is usually longer than that of domestic trade. International trade requires that firms not only have more available capital, but are also sufficiently liquid. The equipment for export-oriented production may be costly, while the working capital needed to pay for the employees and material inputs can be equally, if not more, burdensome. Additionally, unexpected expenses can arise, and they can be substantial – from delays in transport and customs clearance to expensive dispute resolution or legal proceedings in foreign jurisdictions, to unexpected turmoil in foreign markets.
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