DEFINITION
In a back-to-back deal, the trader places the purchase only once a customer has confirmed the sale, for the same goods and quantity. The trader holds no stock: the margin is known before buying, and the goods often go directly from the supplier to the customer.
The risks move rather than disappear. If the supplier fails, the trader still owes the customer; if payment terms do not line up, for example paying the supplier in advance while the customer pays at 30 days, the trader finances the gap. And when the goods cross a border straight from the supplier to the customer, it is a chain transaction, so which sale is zero-rated must be worked out.
Back-to-back is how many brokers trade larger lots without tying up cash in stock.
HOW KOLIBRA HELPS
Kolibra links the customer's order and your purchase as one back-to-back deal and shows the margin per piece, with the payment milestones of both sides on the same deal.