When it comes to international deals and sales it can be difficult to provide a guarantee and the finances to do so.
If you are exporting products and materials, you want to know that you will be paid for the supply and shipment of these particular items.
Export factoring is a solution to any worries you may have as a company, if shipping out materials and items.
Generally, there is no major difference between international and local factoring. The process is similar. You will only be able to draw as much money as owed to you through your invoices.
Some companies will insist on being invoiced in their own countries currency, and you should decide whether you want to be paid in that particular currency or sterling. These things should carefully be considered. Check the exchange rate and work out if you will make a loss.
Using a factor can secure you and they will work on your behalf, driving a harder bargain, and sometimes taking a lower volume of payment than they would in local factoring.
Using an export factor can protect you from currency fluctuations and you can minimise bad debt doing things this way.
One thing to mention is that Export Factoring is a higher cost than normal factoring but less than the cost of Export financing, so this makes a great choice for companies, who may have been refused business funding from other lenders.
The positives of Factoring are:
- You choose which invoices to factor against
- You can receive the funds quickly
- Up to 90% of the funds can be made available
- You company can carry on trading and producing
- You can pay staff, taxes and any debts.