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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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