Category Archives: export

Mistakes Entrepreneurs Make with Their Export Funding

mistakes-to-avoidExport funding is crucial simply because it pertains to resources needed to make foreign transactions run. Unfortunately, some entrepreneurs commit a number of mistakes that puts their business at risk thereby creating losses instead of profits. This is bad considering that the financing used is really hard earned, took time to pool or is sourced through credit. Moreover, this puts one’s export operations on a tight rope.

But if there’s one thing that entrepreneurs can do, it’s to avoid making those mistakes and one way to do so is to know exactly what they are. This way, we’d be aware of what to avoid, what not to do, the warning signs and the immediate fix should things have already gone off course.

Mistake #1: Failure to Budget Wisely

It is of common knowledge that proper allocation of one’s resources is crucial to its success. This is true for every single penny regardless of how it was raised. When one takes out their export funding regardless of size and source, it is imperative to have a plan as to how it will be used and allocated to entity’s needs. We cannot just use them loosely and mindlessly because that can lead to wastage and shortage. Nobody wants that and it’s a sure way to dismantle hard work.

Mistake #2: Absence of Planning

There are many types of export funding from restricted earnings to savings to receivables financing to borrowing. When it comes to the latter, it is imperative to plan about its payment. Those liabilities will have to be repaid as mandated by the terms one has agreed upon with their chosen financial provider. This will ensure that there will be no missed payments or penalties. As they say, with every borrowing comes an exit strategy.

Mistake #3: Lack of Proper Accounting

Once the amount gets approved and enters the company’s books, be sure to have accounted for the transaction properly. The books, records and reports must state its presence so that it will be reflected in the financial statements and be visible when decision making and evaluations are performed. Failure to do so will likely have the business and its staff overlooks the export funding leading to unwise use of it.

Export funding is a tire that works to keep the company running. If it’s not used properly, chances are it won’t serve its purpose as expected.

How and Why Export Finance Works

Exporting-financeBusiness, as it is, is not an easy venture. It takes a lot of dedication, hard work, finances and of course guts. If opening up shop domestically is already a massive undertaking, imagine how magnified everything becomes when we think internationally. Exportation both frightens and excites an entrepreneur. But to us, it’s not something to be scared of especially when we’ve got export finance to back us up.

To a lot of people, export finance is something new and foreign. But given its perks and benefits, you’d be at a disadvantage if you never get to hear about it and we’re here to fix that.

By definition, export finance is the method by which companies get to trade internationally without the usual burdens of documentation and threats to collections and liquidity. This is done by selling the rights to collect against export sales invoices in exchange for an advance of their value to be received earlier than their maturity.

Majority of sales transactions happen on credit. If you look at your accounting books, you’ll realize that sales occur either on cash or on credit. With foreign trade, majority of importers opt to defer payment. This means that they shall withhold payment until a set maturity date which is oftentimes the time by which the goods are received or when they have been resold.

The very reason why many businesses find it useful is because it helps avoid issues with collection and liquidity. International trade means additional administrative costs and the need to fine tune certain processes to comply with the culture and laws of a specific country or territory. Additionally, export finance providers tackle the administrative requirements in terms of collection which saves the company both time and resources.

Moreover because it speeds up the collection process, the level of cash inflows grows as sales increase. This alone strengthens working capital and improves the entity’s state of liquidity and solvency. The process even helps minimize if not completely avoid financial risks namely credit, foreign currency and interest rate risks.

Overall, export finance help business entities who wish to take advantage of the opportunities presented by the world market. By cutting down and removing factors that present risks or negate benefits, it allows even the smaller companies to venture further. Even startups can make use of it as it does not have the strict requirements and application process that most funding methods and institutions require.


Learn more at workingcapitalpartners.com

How Export Funding Can Help Your Dreams Come True

export-fundingWhen you ask just about any entrepreneur on the face of the planet, they’ll tell you that one if not the biggest dream they have for their company is to go global. That’s no surprise. Who doesn’t anyway? But that’s no saying that it’s an easy job. It’s actually pretty tricky, arduous and risky even. Luckily, brands that aim to export their products found help through export funding. Why? Read on to find out.

Diving into and tapping the international market sounds like a dream. It opens up a lot of opportunities. For instance, there’s a bigger market. This allows potential for increased sales and with that profits too. Per unit cost of production can also decrease and seasonal losses will be avoided. There is better risk diversification as well because the business is supported by both domestic and international markets.

But as we’ve said earlier, exporting is serious business and it comes with costs, a lot of work and risks.

First of all, there are the added administrative expenses. Either increased labor hours are required and there’s a need for more capital to fund for equipment and office space or the company needs to set up a satellite office to facilitate off-shore accounts. Remember that collection will be done over massive distances. Luckily with export finance, the provider will shoulder the collection function so there’s no need for added administrative costs and capital.

Second, trading internationally involves a lot of meticulous documentation. Invoices for instance can be tricky because language barriers can be a pain most of the time. The entity also has to conform to the laws, regulations and standards of each territory it wishes to bring its products to. But with an export finance arrangement, all of these documentations will be handled by the provider’s team who has been trained, are educated and are experienced about the laws, customs, traditions and language of various countries.

Third, export finance allows companies to diversify their risk as well as minimize if not avoid them. One of the method’s main services is the advancement of the value of export invoice sales thus allowing the company to make use of its resources immediately and as sales occur. This removes the risks of cash flow and liquidity issues. It is also because of this reason that credit, foreign currency and interest rate risks are best avoided.


Check out workingcapitalpartners.com to learn more about financing.

The Export Overdraft Timeline

export overdraftThe export overdraft is a procedure designed to make overseas and international trade possible without the often present obstacles of meticulous documentation and financial risks that come with it. The said method benefits established companies, startups, small to medium scale enterprises and businesses in recovery.

The very charm of export overdraft lies in its ability to deter and minimize the risks involved with overseas trading. Businesses would of course want to expand their reach and take advantage of foreign markets but because of factors like credit, interest rate and currency risks and not to mention legislation and documentation, many entrepreneurs can feel intimidated.

Furthermore, the physical distance creates a huge lag in terms of payment collection. Remember that many buyers, especially importers, prefer to defer payment until the goods have been shipped and delivered or until they have been resold. This can create liquidity and cash flow problems for the company.

Lastly, international trade will require companies to open up and increase their administrative manpower and resources to man the operations at particular overseas sites. Laws, regulations, standards, duties, taxes, tariffs, language and culture will have to be considered too which requires a lot of work, time and money. Fortunately, all these can be fixed with the help of an export overdraft.

But how does such method work? To better explain, we’ve made a brief timeline on the basic procedures and processes involved in its use. Take a look.

Step 1: A factoring company is chosen and an application is made. Certain requirements will have to be produced depending on the mandates of the factor. Creditworthiness shall be checked as well.

Step 2: Upon approval, the goods for export are shipped to the importer. The provider shall also release the advance on the value of the sales invoice to the exporting entity.

Step 3: The factor shall take on the burden of collection and assume all other tasks related to it thus it shall provide for the assignment notice for the invoice. Such document is written in the importer’s language or in English, whichever is preferred and used for business transactions and documents in their country. All of this is done in compliance to the rules and legislation.

Step 4: Upon complete transfer of the goods, a proof of delivery is obtained. Assignment and verification checks shall likewise be done.

Step 5: Collection for payments is done in the importer’s currency but the advance provided to the business is in their country’s monetary denomination. This is one of the many benefits of export overdraft.

Export Finance Pros and Cons

Have you heard about export finance? Not yet? Well then, allow us to introduce it to you along with its slew of pros and cons.

First of all export finance is a means by which companies trade and sell their goods abroad with the help of a financial provider who in turn facilitates collection, customer credit screening and other relevant documents to facilitate the transactions.

We all know that many business entities feel intimidated and apprehensive about taking a leap or pushing forward to the next step in their ventures due to the risks that they could potentially face and the burdensome task that may or may not turn into actual profits. Furthermore, foreign buyers much like their domestic counterparts prefer to delay their payments up until they receive, make use and/or sell the products. This puts potential exporters at a disadvantage. To fix the dilemma and the choke point, export finance comes into the picture.

There are many benefits that export financing can provide companies. Let’s name some of them.

First, it allows entities to take their business to the next level. Domestic sales are great but who would not want to grow internationally too? Who doesn’t want to expand? All entrepreneurs want growth and expansion and export is one way to achieve this.

Second, credit screening of customers from foreign countries can prove to be very challenging given the distance. Even in today’s digital world, there will still remain a time lag. Plus, one can never be fully aware of the various credit regulations on a specific country. An export finance provider takes care of this task and does the screening for you to only extend credit sales to creditworthy clients.

Third, it helps maximize sales potential. By going abroad, one branches out their market creating more potential for sales and profits. After all, you can never gain a loyal following if people are not aware of your presence.

export-finance2Fourth, services such as export factoring and discounting can help hasten up collections even more and bring in cash to companies equivalent to their credit sales even if foreign customers have not paid their invoices yet.

Now as for the disadvantages, there are a relative few. Export finance may not be suitable for companies that does not have a strong potential for export trade. First of all, it would be irrelevant. This is why careful deliberation must first be done when planning about financing methods.

Learn more on export financing here http://workingcapitalpartners.co.uk.

 

Have you heard about export finance? Not yet? Well then, allow us to introduce it to you along with its slew of pros and cons.

First of all export finance is a means by which companies trade and sell their goods abroad with the help of a financial provider who in turn facilitates collection, customer credit screening and other relevant documents to facilitate the transactions.

We all know that many business entities feel intimidated and apprehensive about taking a leap or pushing forward to the next step in their ventures due to the risks that they could potentially face and the burdensome task that may or may not turn into actual profits. Furthermore, foreign buyers much like their domestic counterparts prefer to delay their payments up until they receive, make use and/or sell the products. This puts potential exporters at a disadvantage. To fix the dilemma and the choke point, export finance comes into the picture.

There are many benefits that export financing can provide companies. Let’s name some of them.

First, it allows entities to take their business to the next level. Domestic sales are great but who would not want to grow internationally too? Who doesn’t want to expand? All entrepreneurs want growth and expansion and export is one way to achieve this.

Second, credit screening of customers from foreign countries can prove to be very challenging given the distance. Even in today’s digital world, there will still remain a time lag. Plus, one can never be fully aware of the various credit regulations on a specific country. An export finance provider takes care of this task and does the screening for you to only extend credit sales to creditworthy clients.

Third, it helps maximize sales potential. By going abroad, one branches out their market creating more potential for sales and profits. After all, you can never gain a loyal following if people are not aware of your presence.

Fourth, services such as export factoring and discounting can help hasten up collections even more and bring in cash to companies equivalent to their credit sales even if foreign customers have not paid their invoices yet.

Now as for the disadvantages, there are a relative few. Export finance may not be suitable for companies that are does not have a strong potential for export trade. First of all, it would be irrelevant. This is why careful deliberation must first be done when planning about financing methods.

What is export finance?

Export Finance is designed to be used by Small and Medium Enterprises venturing out in to the foreign trade industry but it can also be used to help out rising business who might need the extra money to start to export but have budget constraints because of delayed customer payments or restrictive dealer payment conditions.

How does it work?

export overdraft for business1. First the client will apply for credit for their international client.

2. The export overdraft facility identifies a correspondent factor through our worldwide network in the factoring industry. They then get a credit limit to pay for the necessary transaction.

3. The moment credit score agreement have been obtained, the products may be sent and invoiced within exactly the same way when they would when they ended up being sent to the UK. This specific reduces the risk for the issues connected with rearing and showing characters associated with credit score and marrying these to payments associated with lading and inspection vouchers etc.

4. Within the assistance, overdraft facility liaison can provide the assignment notice for the invoice the client’s own dialect as well as compliant with their country’s lawful jurisdiction.

5. When the products have been delivered, a delivery receipt must be provided and filed with the facility.

6. Depending on the service levels needed, your Correspondent factor may perform task along with verification tests with the client.

7. The drawing of funds is identical with domestic invoice factoring.

8. Depending on the package you apply for, the correspondent can also collect debt from the international customer, again in their own language and law.

9. As with above, the liaison can also receive payment in the customer’s currency.

10. When the payment is settled, the remaining balance of the invoice will be credited back to the client minus the agreed transaction fee.

Now that you know what export finance is, it might just be what you need to help you start exporting.