April 2018
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  • export overdraftNo matter what time and age it is, finances are always a tricky subject especially when we’re talking business. Many entrepreneurs find themselves at a crossroads every time the topic presents itself and all the more when export trade is involved. Luckily, there’s something like the export overdraft to help smoothen out the rough waters.

    But what is an export overdraft to begin with? In its simplest sense, it is a financial arrangement that allows businesses to advance the value of their customer invoices from their export sales transaction prior to their maturity. Since a majority of importers opt to pay their purchases only after delivery or once the goods have been resold, cash is locked up for considerable periods often taking up to months until complete payment is achieved.

    Receivables, both from domestic and foreign sales, are an asset. They’re good but only to an extent. When they remain outstanding for prolonged periods of time, this can create a liquidity issue preventing the company from reinvesting in itself and using its resources in operations as should be. To hasten the collection without having to tarnish client-customer relationship, the export overdraft is utilized.

    Additionally, it is the perfect method for just about any type and size of business. It’s non-discriminatory in the sense that it does not bank on the company’s creditworthiness or number of assets to garner an approval and cash release. This is because the export overdraft is first and foremost not a debt. It does not require an asset-based or any other type of collateral. Additionally, it is the creditworthiness of the invoices being subjected to the service and the capacity to pay of the customers to whom they are attached. This makes it available not only to established exporters but also to startups, small to medium scale enterprises and even recovering entities.

    It’s relatively fast too and can be arranged in only a matter of days. This is a stark contrast to other financing options available in the market which can take up to weeks or even months to process.

    The export overdraft likewise aids in cash flow injection which in turn helps improve liquidity and strengthen working capital. The hastened collections also allow the business to further finance and support its growing operations without the need to borrow or incur debt. Plus, without any interests, the method only calls for a fixed fee which helps save on costs.
    Learn more about export overdraft on this page http://workingcapitalpartners.com/.

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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.


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