Export 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.