Trade finance

Trade finance refers to the financial instruments that help businesses pay for and secure international trade transactions, such as letters of credit, documentary collections, bank guarantees, export credit insurance and supply chain financing. These tools manage the risk that a buyer will not pay or a seller will not ship.

How BC law treats it

Letters of credit and guarantees are governed by contract and usually by ICC rules such as UCP 600 and URDG 758, and banks are federally regulated under the Bank Act, SC 1991, c 46. Security over goods and receivables is perfected by registration under the Personal Property Security Act, RSBC 1996, c 359; securities law under the Securities Act is not the governing framework.

What it means for your business

Trade finance can let you sell abroad with less payment risk, but the documents must match the credit terms exactly.

Risks and common mistakes

Under a letter of credit, minor discrepancies in shipping documents can allow the bank to refuse payment.

Browse the full Fulcrum Law Dictionary for related terms.

General information about British Columbia and Canadian law, current to October 2026. It is not legal advice.