Expand globally with international trade finance
Even with our reliance on international trade in our global economy, the trade or import / export business remains complicated and costly. It is not uncommon for many small businesses to have issues with cash flow, insufficient working capital, and revenue generation. Those in international trade have these standard small business headaches as well. They also have issues unique to their industry to deal with with such as adherence to international trade and commerce laws, insurance costs, and exceptionally long payment timeframes (60-90 days is common).
In contending with a plethora of trade and commerce issues it’s no wonder that securing reoccurring international trade financing is a top priority for those in the business. Standard bank loans and related finance options are often insufficient given all the issues the business owner has to face.
Take advantage of international trade financing options
For all these reasons and more, many choose to partner with an international factoring company to provide just-in-time funding for importing and exporting. International factoring companies can work with both sides of the import-export model, including foreign companies who sell to the U.S. and U.S. firms that sell to foreign nations.
In some ways, factoring international trade works the same as other factoring services: the factor purchases the invoices at a discount rate providing the seller with the money needed right away. The factor then collects payment from the client 30 days or more later. Yet with financing international trade, companies have to contend with additional risks and concerns, such as:
The higher risk of non-payment from international clients, which can be harder to collect on than domestic clients
International trade insurance requirements and issues
Greater circumstantial risk dealing with political, environmental or economic affairs of other nations.
Cultural, language and currency barriers associated with international commerce
Payment terms that are routinely 60-or 90-days out instead of 30.
Experienced international factoring companies prove invaluable partners
Reputable international factoring companies are familiar with all aspects of the import and export business. Many are willing to “hold the hand” of new clients to walk them through these new processes and procedures. More than financing international trade, these international factoring companies guide the small business through the entire logistical process making sure they have the needed insurance requirements and are meeting international trade guidelines. Navigating these processes alone is worth the 3rd cost of international trade finance for most.
The types of industries that commonly partner with factoring international trade companies include: manufacturers, distributors, wholesalers, resellers, luxury goods, apparel & textiles, and more. Cost and pricing structure vary from firm to firm; however, most international factoring services can cost a bit more due to the lengthy wait time associated with the invoice collection process. Collecting 80% of the total invoice value is an industry-specific average estimate.
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