In essence, the trade finance indicates financing for trade and it involves both international and domestic trade transactions. Any given trade transaction needs a seller and a buyer. The other intermediates such as financial institutions and banks can help in facilitating these particular transactions by financing the deal.
The purpose of trade finance is to bring a third party to do away with the supply risk and payment risk. Trade finance enables the exporter to get payment as per the agreement whereas the importer is allotted credit to fulfil the trade order.
