Which is the right trade finance product

In Kenya’s highly competitive procurement and project delivery space, SMEs and contractors face a common hurdle ; access to working capital. Winning a contract is only the first step. The real challenge comes next:

• How do you fund project mobilization?
• Can you afford materials and labor before client payments arrive?
• What happens if the client requires performance guarantees?

This is where Trade Finance solutions step in as powerful enablers. However, not all products are created equal. Choosing the right one makes all the difference.

Understanding the Trade Finance Options

At Recolte Limited we offer a range of solutions tailored to address different stages and risks in your procurement journey. Here’s how to pick the right one:

1. Bid Bonds — For Securing Tender Opportunities

When to choose: You’re bidding for a contract and need to assure the project owner of your seriousness and financial credibility.

Best for:

• SMEs in construction, supply, and service sectors
• Contractors submitting tenders

Benefits:

• Enhances your tender’s competitiveness
• Positions you as a credible and capable bidder

2. Performance Bonds — For Project Execution Assurance

When to choose: You’ve been awarded a contract and need to guarantee project completion as per the agreed terms.

Best for:

• Contractors handling large or sensitive projects

Benefits:

• Builds trust with project owners
• Reduces risk for all parties involved

3. Advance Payment Guarantees (APG) — For Upfront Payments

When to choose: The client offers advance payment but requires assurance they will recover funds if the project isn’t delivered.

Best for:

• SMEs and contractors with limited working capital

Benefits:

• Access upfront funds to kickstart projects
• Meet project timelines easily

4. Local Purchase Order (LPO) Financing — For Fulfilling Orders

When to choose: You receive a purchase order but lack the cash flow to fulfill it.

Best for:

• Suppliers of goods and services
• SMEs handling large or multiple orders

Benefits:

• Immediate access to working capital
• Maintain good supplier relationships and timely deliveries

How to Make the Right Choice

Ask yourself these simple questions:

• What stage of the procurement or project cycle am I in? (Bidding, winning, mobilizing, or fulfilling?)
• What risks am I trying to cover? (Financial credibility, project completion, cash flow, or client assurance?)

What is my cash flow status? (Do I need funds now or am I safeguarding future performance?)

Matching your needs to the right trade finance product ensures your business runs smoothly and you maintain excellent relationships with your clients.

At Recolte Limited ,we understand the local procurement landscape and the realities faced by Kenyan SMEs, contractors, and suppliers. Our tailored trade finance solutions help you win contracts, execute projects smoothly, and grow sustainably.