Selling your merchandise or services in export markets can be a quite lucrative and a true engine for development for your firm. Manufacturers, service providers and traders can all benefit from adding foreign markets to their portfolio of clients. Even so, selling into export markets can also deplete your money flow. Significant companies that have a cushion of funds in the bank, typically have no issues. Nonetheless, smaller sized and emerging companies can run into money flow troubles extremely swiftly.
The greatest problem for exporting firms is waiting 30, 60 or even 90 days to get paid for their goods or solutions. Slow paying consumers can truly influence your company’s cash flow. This can challenges your capacity to pay suppliers, staff or even rent.
A single answer to this common issue is to go to the bank. If you can supply them with a couple of years worth of audited financial statements, have a very good track record and have great personal credit, then the bank should be capable to help you get enterprise financing. Nevertheless, getting bank financing can be extremely tough for tiny and medium sized firms.
A better option is to use export factoring, a kind of export finance. Export factoring makes it possible for you to accelerate the payment of your foreign export invoices, delivering you with the essential funds to meet your obligations and grow your business. With export factoring you can get your invoices paid in as tiny as 2 days. And, as opposed to most conventional financing tools, factoring is straightforward to acquire and speedy to set up.
Invoice factoring can also be very easy to use. It works as follows:
1. You sell and provide your goods/services to your consumer
2. You invoice your buyer
3. The factoring firm offers you with an advance on your invoice of up to 85% of its net worth. This is the 1st installment
4. You get instant funds to operate your business
5. When your client pays, the transaction is settled and the factoring organization rebates the remaining 15% as a 2nd installment, less a small fee
The most important requirement to qualify for factoring financing is to do business with reputable foreign clients, such as multinational corporations. If you do business with trustworthy customers you are going to have a very good possibility of obtaining financing.