No two export transactions are exactly alike, and neither are the financing needs that come with them. Sometimes the goal is getting paid faster. Other times it's reducing risk when selling to a new buyer, funding goods before they leave port or accessing cash while documents are still moving through the payment process.
This guide explains the most common trade finance solutions available through RTS Capital, showing when to use each one, their advantages and disadvantages, and how to determine which option is best for your business needs.
Which Trade Finance Solution is Right for Your Business?
Before you compare funding options, it’s important to define the exact challenge you need to solve. Each solution supports cash flow, but each is built for specific situations. The best choice often depends on three factors: when you need access to capital, how much payment risk you're comfortable taking on and where cash flow constraints occur in your export process.
Recourse Factoring
Recourse factoring lets exporters access cash before customers pay, using outstanding invoices as collateral. The exporter remains responsible if the buyer doesn’t pay, making this a cost-effective option for those with established, reliable customers.
Advantages
- Typically lower cost than non-recourse factoring
- Improves cash flow quickly
- Supports ongoing working capital needs
Disadvantages
- Exporter retains the risk of non-payment
- No protection against buyer default
- Less suitable for higher-risk transactions
Best for: Exporters with established buyers who want to improve cash flow at a lower cost.
Non-Recourse Factoring
Non-recourse factoring lets exporters access cash from unpaid invoices, with the export factoring company assuming the risk if an approved buyer doesn’t pay. This added protection, while costing more, is ideal for extending credit to new or international customers.
Advantages
- Reduces exposure to credit risk
- Supports sales to new or international buyers
- Improves cash flow without waiting for payment
Disadvantages
- Typically costs more than recourse factoring
- Coverage may be subject to approval requirements
- Not all transactions may qualify
Best for: Exporters seeking both working capital and protection against buyer non-payment.
Electronic Express Release (TT) Funding
Electronic Express Release (TT) funding gives exporters access to capital after goods ship, but before payment is received. This helps bridge cash flow gaps while waiting for payment, especially when documents are released electronically.
Advantages
- Accelerates access to cash after shipment
- Helps bridge payment timing delays
- Supports uninterrupted business operations
Disadvantages
- Available only for qualifying transaction structures
- Funding occurs after goods have shipped
- Not every buyer or payment arrangement is eligible
Best for: Exporters waiting for payment through telegraphic transfer after goods have shipped.
CAD Funding
Cash Against Documents (CAD) funding provides working capital while shipping documents are still being processed for payment. Unlike TT funding, CAD is used when documents are exchanged for payment, helping exporters maintain cash flow before payment is finalized.
Advantages
- Provides funding during the document collection process
- Improves liquidity without waiting for final payment
- Supports ongoing operational expenses
Disadvantages
- Dependent on the structure of the export transaction
- Funding timing may vary by transaction
- Does not eliminate all buyer payment risk
Best for: Exporters whose customers receive shipping documents before payment is completed and who want faster access to working capital.
Gate-In Funding
Gate-in funding allows exporters to access capital before cargo even leaves the port, once goods are delivered to the terminal and awaiting shipment. This gives exporters working capital earlier in the export process.
Advantages
- Provides funding earlier in the export cycle
- Helps cover inventory and shipment-related expenses
- Improves cash flow before payment is received
Disadvantages
- Requires goods to meet funding eligibility requirements
- Available only at a specific stage of the shipping process
- May not be necessary for businesses with strong cash reserves
Best for: Exporters that need working capital before goods leave the port, especially ones who use a reputable freight forwarder.
Whether you need funding after invoicing, during transit or before shipment, RTS Capital offers flexible trade finance solutions designed to support your growth and help keep cash flow moving. Contact RTS Capital today to find out more about our international factoring services.
