Tag Archives: export financing

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

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.