DRAFT Improving the SMEs Access to Trade Finance
in the OIC Member States
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of the four core elements (payment, financing, and risk mitigation and information flow). In
addition to this proposed framework for understanding trade finance (including emerging
solutions in supply chain finance), it is instructive to consider trade finance in terms of the
transaction flow related to trade activity, as well as in terms of the various providers of trade
finance that combine to make up the global trade financing landscape.
The requirements and options related to financing across the lifecycle of a trade transaction
are illustrated by the following graphic from UNESCAP/ITC. The illustration provided by the
UN Economic and Social Commission for Asia Pacific (UNESCAP) together with the
International Trade Centre (ITC) in Geneva (Trade Finance Infrastructure Development
Handbook, 2005). The UNESCAP/ITC approach, devised before significant focus was put onto
supply chain finance, is instructive in its attempt to map financing options and solutions
against an illustrative trade transaction, or what is referred to as the trade cycle.
Figure 6: Transactional View of Trade Finance
Source: Trade Finance Infrastructure Development Handbook, UNESCAP/ITC, 2005
Irrespective of the specific instrument or financing structure under consideration, a view can
be taken based on one or more of the categories above, to determine the nature and suitability
of a particular trade finance mechanism to meet the needs of one or more parties to the
underlying trade transaction.