Trade Finance Procedures
Trade finance only works when the structure is clear, the documents are clean, and the repayment path is visible from day one. This page explains how Financely handles three common procedures: LC-backed transactions, self-liquidating transactional trade finance, and D/P collections.
We review the transaction, structure the document chain, coordinate counterparties, and work with funding and regulated providers where the transaction requires formal banking execution.
LC-Backed Trade Finance
Used where the seller wants a stronger payment structure and the transaction is best anchored by a bank-issued letter of credit.
Self-Liquidating Trade Finance
Used where the financier funds a specific purchase and expects repayment from the identified sale proceeds of the same trade cycle.
D/P Collection Procedure
Used where documents are released against payment and the parties want a simpler process than an LC, with less bank involvement on payment risk.
Financely’s Role
We focus on underwriting, structuring, document discipline, counterparty coordination, and moving eligible files into a financeable format.
Interactive Procedure Map
Select a procedure below to view the transaction flow.
LC-Backed Trade Finance
Best suited to transactions where the seller wants bank-backed documentary payment mechanics and the buyer can support an LC issuance process.
Transaction Intake
The client submits the purchase contract, supplier details, buyer details, goods description, shipment route, target tenor, and KYC package for first review.
Structuring Review
Financely reviews the commercial terms and helps define the LC format, document list, shipment tolerances, inspection requirements, and whether confirmation or margin support is needed.
Bank Coordination
The buyer proceeds with the issuing bank. Financely coordinates wording, closing conditions, and any required amendments before shipment takes place.
Shipment And Documents
The seller ships the goods and prepares the required document set. Financely checks for documentary consistency before bank presentation where this support is requested.
Presentation And Examination
The documents are presented through the banking channel. The banks examine compliance against the LC terms. Clean presentation is critical.
Payment And Release
Upon compliant presentation, payment or deferred-payment handling proceeds through the bank structure. The buyer receives the documents and claims the cargo.
Self-Liquidating Transactional Trade Finance
Best suited to transactions where a financier funds a specific purchase and expects repayment from the same trade cycle rather than from general corporate cash flow.
Live Trade Submission
The client submits the supplier contract or pro forma invoice, downstream sale evidence, logistics plan, KYC package, and expected margin profile.
Underwriting
Financely reviews counterparties, goods, route, insurance, inspection, title chain, tenor, sanctions exposure, and whether the trade has a credible exit and repayment path.
Control Structure
The transaction is shaped around practical controls such as direct supplier payment, controlled accounts, receivables assignment, document control, or collateral management.
Funding Terms
Indicative terms are issued covering amount, tenor, fees, required margin, documentary conditions, and repayment waterfall for the financed transaction.
Supplier Payment And Shipment
Once conditions are satisfied, the supplier is paid under the agreed structure and shipment proceeds with the document and proceeds chain monitored.
Proceeds Capture And Closeout
The downstream buyer pays into the agreed route, the financier is repaid first, and the balance is released according to the transaction waterfall.
D/P Collection Procedure
Best suited to transactions where the parties want a simpler documentary mechanism and the goods can still be controlled through the transport and title document chain.
Commercial Review
The parties agree a documentary collection structure. Financely checks whether D/P is commercially sensible for the buyer, goods, route, and country risk involved.
Risk Screening
We assess buyer quality, shipment mode, document control strength, and whether any short bridge or seller-side support can be justified.
Shipment And Collection Setup
The seller ships the goods and submits the original documents with collection instructions to the remitting bank for onward transmission to the collecting bank.
Buyer Presentation
The collecting bank presents the documents to the buyer and requires payment before the document set is released.
Payment And Document Release
Once the buyer pays, the documents are released and the goods can be claimed through the transport and clearance chain.
Exception Handling
If the buyer refuses to pay, the seller and its advisers may need to hold documents, redirect cargo, seek resale, or manage demurrage and storage exposure.
Important: The stronger the document chain and proceeds control, the easier it is to move a transaction into a financeable format. Weak logistics discipline, unclear counterparties, or missing documents usually kill the file before pricing is even discussed.
Documents Typically Reviewed
| Document Or Data Point | Why It Matters |
|---|---|
| Purchase Contract Or SPA | Shows the core commercial terms, product, quantity, pricing basis, shipment window, and payment method. |
| Pro Forma Invoice Or Supplier Invoice | Supports supplier payment sizing and confirms what needs to be funded or instrumented. |
| Offtake Contract Or Purchase Order | Helps show the repayment path for self-liquidating trades and the commercial exit for the goods. |
| KYC And Corporate Documents | Needed for counterparty review, compliance screening, and onboarding with funding or regulated providers. |
| Transport And Title Documents | Critical for document control, cargo release, and practical leverage where payment is document-driven. |
| Insurance And Inspection Support | Helps reduce performance disputes and supports a cleaner underwriting decision. |
Where Financely Fits In The Process
Underwriting And Structure
We review whether the transaction is real, financeable, and commercially coherent before time is wasted on the wrong route.
Document Discipline
We help define the document list, identify weak points early, and reduce avoidable friction around presentation and release.
Counterparty Coordination
We help align the moving parts across buyer, seller, funding parties, and service providers so the file stays on track.
Execution Path
Eligible transactions may move forward toward indicative terms, document-driven execution, and funding coordination through the appropriate counterparties.
Regulatory And Scope Disclaimer: Financely is not a deposit-taking bank and does not hold itself out as providing regulated banking services. We act as an advisory, structuring, and coordination platform. Where the transaction requires a bank-issued instrument, regulated payment service, licensed lender, or other regulated financial service, execution is handled by the relevant regulated or licensed provider.
Request Review Of Your Trade
If you have a live transaction, a supplier contract or invoice, and a defined payment structure, send the file for review. We can assess whether the transaction is suitable for LC-backed handling, self-liquidating trade finance, or a documentary collection route.
Frequently Asked Questions
Is this page legal advice?
No. This page is a commercial overview of common trade finance procedures and Financely’s role in structuring and coordinating eligible transactions.
Can Financely issue a letter of credit?
No. A formal letter of credit is issued by the relevant bank. Financely can help structure the transaction and coordinate the file where appropriate.
Which procedure is usually stronger?
In practice, LC-backed transactions are usually stronger on payment mechanics than D/P collections. Self-liquidating trade finance can also be highly bankable when document and proceeds control are clear.
What makes a trade difficult to finance?
Missing documents, weak counterparties, unclear cargo control, thin margins, poor compliance hygiene, and no credible repayment path are common reasons transactions fail review.
Financely operates as a transaction-led capital advisory and structuring desk. Any funding, issuance, payment execution, or regulated activity is subject to the terms, approvals, and policies of the relevant licensed or regulated provider involved in the transaction.