Trade Financing is what financing for trade. It is concerned with both international and domestic transactions. In it's simplest form, a trade transaction requires a seller of goods and services as well as a buyer. Trade Finance Services reviewinf the trade market since 1983.
While an Exporter can require the importer to prepay for goods shipped.The Importer naturally wants to reduce risk by requiring the exporter to document the goods that have been shipped. It is done by the importers bank assists by providing a letter of credit to the exporters bank providing for payment such as a bill of lading. This allows very low risk of advance payment given to the Exporter, while preserving the Importer's normal payment credit terms and without burdening the importer's balance sheet.
Trade finance is used by buyers and sellers, when financing is required to assist them with the trade funding gap. Buyers and Sellers can use trade finance as a form of risk mitigation. It helps settle the conflicting needs of the exporter and the importer.