Finnvera starts financing bills of exchange, that are used in export transactions

Finnvera starts financing bills of exchange and promissory notes, that are used in export transactions. The new financing solution is suitable for exports of Finnish capital goods with long, 2-to-5-year payment period. Similar to the Export Credit launched a year ago, Bill of Exchange financing is arranged by Finnvera and its subsidiary, Finnish Export Credit Ltd that acts as the financier. The rule of thumb is that bill of exchange financing is used if the financing need is approximately EUR 0.2–2 million and export credit is for larger export transactions worth approximately EUR 2-20 million.

"Bill of Exchange financing meets the wishes of small and medium-sized companies in particular, enabling Finnvera's direct export financing even for smaller export transactions. We hope that the solutions will help Finnish exporters win deals and encourage new markets and new customer relationships," says Executive Vice President for Finnvera’s SME and midcap financing, Juuso Heinilä.

Bill of exchange financing benefits both exporters and buyers. Compared to a credit agreement, bills of exchange are shorter and more simple documents and therefore their pricing is lower and negotiation process faster.

“Our goal is to improve the competitiveness of Finnish export companies in export transactions with the means of financing. We want to help the Finnish exporters to win more deals and thereby enhance their growth possibilities and exports from Finland”, says Finance Director Otto Lindstedt.

The exporters may apply the new bill of exchange financing by using the application form in our webpages.

“The bills of exchange and promissory notes are practicable credit documents for foreign trade. Finnvera has collected information about the use of bills of exchange and promissory notes in various countries for several years. We check the suitability of bill of exchange financing for an export transaction on a case-by-case basis before giving the financing indication to the exporter”, says Development Manager Minna Lindqvist. 

This is how the bill of exchange works

Bill of exchange financing can be granted to exporters, who offer a payment period of 2–5 years to their foreign buyers as part of their export transactions and this payment period is documented with bills of exchange or promissory notes as credit instruments. Bill of exchange financing is suitable for exports of capital goods from Finland.

The financier purchases from the exporter the bills of exchange signed by the buyer. By signing the bills of exchange, the buyer undertakes to pay the amount of each bill of exchange on its due date to the exporter or to its order. After the delivery of the export product, the bills of exchange are discounted by Finnvera and Finnvera pays the discounted price to the exporter. 

The buyer pays the bills of exchange semi-annually. Each semi-annual payment is documented with a separate bill of exchange. For example, if the payment period is 2 years, there will be 4 bills of exchange. 

Further information:

Otto Lindstedt, Finance Director, Growth and internationalisation, Finnvera, tel. +358 29 460 2706 

Minna Lindqvist, Development Manager, Large Corporates, Finnvera, tel. +358 29 460 2678

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Read more about Bill of Exchange financing.