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  • export-financeWhen we talk about international trade, the topic on export finance is a highly touched upon concept. It has after all paved the way for many entities to enter the global trading platform making it one of the most in demand financing tools of today. But why does it matter? How exactly does it change the game for businesses all over the world?

    You see, one of the ways by which companies diversify risks is by expanding their market. As much as strong domestic sales are beloved, entrepreneurs can’t escape the effects of seasonal losses, changes in consumer behavior and even the end of a product’s life cycle. Export helps prevent or at least minimize those threats.

    But then we all know that exporting isn’t as easy as what some make it to be. It’s challenging to say the least and even that is an understatement. It takes a lot of time, skill, and not to mention resources to bring one’s operations to the global scene.

    Since export finance allows companies to advance the value of their export sales or invoices, it gives them the power to tie up sales and cash flows. Moreover, collections are hastened which helps in terms of liquidity and working capital. Remember that most if not all importers opt to defer payments until the goods have been received or resold and this can be a problem in so many ways.

    By advancing the value of invoices, companies also get to avoid certain risks that may impose financial losses. When sales on credit occur as is with the norm of international or offshore transactions, there lies credit, foreign currency exchange and interest rate risks. All these can be prevented with the help of an export finance arrangement.

    Another important point to take note of is that foreign markets come with their own set of legislations, culture, and language to name a few. This can impact administrative tasks particularly those that involve collections. Invoices will have to be tailored to the country’s language. Paper work has to be done in order to be allowed trade. The list goes on. The good news is that many export finance providers are skilled to take on this task. In other words, they shall bear the administrative duties related to the export invoices that have been assigned to them.

    So does export finance matters? Well it does. It does a lot.


    http://workingcapitalpartners.com/solutions/export-finance

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  • export-overdraftMany things in business seem to be exclusive. Exportation for instance is believed to be applicable only to established entities but that shouldn’t be the case. Even small to medium scale enterprises, startups and businesses in recovery can do so too with the help of this thing we call an export overdraft.

    So how does this financing medium work? What perks will we enjoy if we choose to use it? Read on and discover the answers to these questions.

    First of all, it hastens collections. Since majority, if not all, importers opt to buy on credit and defer payment until goods have been received or resold, this creates receivables. Despite being assets, the longer they remain uncollected the higher the threats to liquidity. This also keeps the cash locked in and unavailable for use until the invoice matures and is paid up. Because an export overdraft provides an advance of the value of such export sales on credit prior to their maturity, collection is hastened and done almost instantaneously.

    For the same reason, liquidity is improved, cash inflows are better and working capital is strengthened. This brings us to our next point.

    It fosters continuity. With cash and liquid assets at a steady or increasing level, the business gets to have adequate resources for its regular operations and even for its other endeavors. Furthermore, this gives the entity a chance to reinvest in itself and even grow its export ventures.

    Third, an export overdraft helps cut down administrative work and costs. Apart from the advance received, the responsibility of collection is passed on to the financing institution or provider. This saves both time and money as foreign trade no doubt will demand added labor and expenditures for the added market.

    They even take care of documentary and legal matters. Business owners need no longer worry about the meticulous documentation or about the set of rules and regulations, tariffs, duties and taxes and other legislative restrictions of each foreign market they wish to export to.

    Last and definitely not the least, an export overdraft helps reduce if not eliminate financial risks. Exporting and trading internationally comes with risks. It’s not all honey and roses. It comes with a price and one has to face threats. For instance, we have currency, interest rate and credit risks that pose threats to profitability and returns. By using the said financing medium, companies get to avoid their deadly grip.

    workingcapitalpartners.com

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  • exporttradeAsk any entrepreneur this: Do you want to go global? Chances are they will scream yes in unison. The lure of international trade is too good to resist and why not? It offers so many opportunities and with a bigger market, a lot of potential is within reach. Plus, risk diversification can better be addressed. This is also the reason why export finance has become a go-to tool among dreamers.

    You see, exporting isn’t as easy as it sounds. Sure, the benefits seem endless and abundant but it also comes with challenges and not to mention financial hiccups. For instance, bringing one’s brand to a new country means having to look into that territory’s market potential. It also means fine-tuning the products to best fit the culture and taste of the people. Let’s not forget about marketing either. It takes a lot to introduce a new offering. All of these require funds. Immediate cash.

    There’s also the challenge of keeping cash flows at a healthy level. Majority if not all importers choose to defer their payment. They’d often wait until the goods are fully delivered or until they have been sold. This creates a slowdown in terms of collection thereby trapping cash within export sales invoices. Over time and when in bulk, this can pose threats to liquidity and cash levels.

    Add to this list the challenge of collection. Apart from the time lag, exporters will have to dedicate a new team to cater to the specific region it targets to penetrate. Administrative costs will have to increase as it will entail more labor hours and matching assets and equipment for said duties.

    And how can we forget about documentation requirements and the financial risks. Exporting comes with meticulous paper trail and not to mention legal requirements which are country specific. It also opens up credit, foreign exchange and interest rate risks which can prove to be very costly.

    The good thing is export finance helps address all of these concerns. It allows business entities that wish to trade globally to advance the value of their export sales invoices and therefore receive cash prior to maturity. This reduces if not eliminates liquidity issues, cash flow dilemmas and financial risks. It likewise provides immediate cash accessible for urgent use. Moreover, the provider shall assume the collection function and with it the labor, documentation and legal work, country-specific requirements, equipment and expertise needed to fulfill such tasks.

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  • export-financingExport finance is known to have helped so many companies who only then dreamed to expand and bring their brands to the international scene. If you’re planning to tap export financing to make your expansion dreams come true, here’s a little rundown on what you have to get ready for. Like any other financing option, providers will demand a number of prerequisites. Check out the list of requirements that most providers will have you prepare for.

    1. Books and Financial Documents

    Because receivables are involved, specifically export sales invoices, providers will want to take a look at the company’s books. They may want a rundown on credit sales procedures and terms to ensure that the business practices strong, efficient and reliable controls. At some point, certain providers may also want to see the financial standing of the business through its reports and statements.

    1. Goods and Services

    Exporting sounds exciting but it’s not all bread and butter. There are challenges and one of that would be making the actual sale. Will your offerings be marketable enough to garner profits? Will an importer be interested? Moreover, can you really render the goods and/or services that you promise you would? Because export finance involves providing an advance to the sales invoices, providers will first want to know if you can deliver. Because if you can’t, why would the importer pay?

    1. Customer Creditworthiness

    It is important that your client actually pays or has a good credit history. Do they take too long to pay or don’t they pay at all? Unlike traditional loans where the financial institution will look into your credit score, financial standing and require collateral, this medium will necessitate that customers possess a good credit score.

    1. Customer Financial Standing

    Can they really pay their dues or will they ultimately lead to bad debts? Providers will want to know. After all, they’re the ones collecting from them and buying the rights thereto. It would be a huge loss on their part so it’s no surprise if they will demand for a background check on the customer to whom the invoice is attached to.

    1. Export Receivables

    Of course, export finance will not be possible if there are no international or foreign credit sales to begin with. These receivables will have to be validated and double checked to ensure that they are indeed binding, particularly on the owing client’s part.


    Check out http://workingcapitalpartners.com/solutions/export-finance

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