Finance Options For Trading Abroad

For a number of years, the options for small companies which operate internationally and require additional capital have been limited to traditional bank loans. Increasingly, however, this is no longer the case. Innovative methods of cashflow enhancement which have been successful in the domestic market are now making their way into the international arena.

Perhaps the fastest growing of these methods is export factoring. As with traditional domestic factoring, the business model operates through a finance agency providing an immediate cash influx in return for the rights to collect payment from a batch of invoices originally belonging to the recipient company. This can be enormously useful to any international trading company which is experiencing cashflow issues, or which is looking to expand its business without taking on additional bank debt. Obviously, the finance agency collects more from the invoices than it provides through the initial payment, but the amount of invoices handed over is in the control of the recipient company.

In addition to the usual factoring services provided domestically, those agencies which operate in the international arena often offer further assistance, specific to the needs of their client base. For example, most agencies can assure the recipient company of a multilingual credit control function, which is vital to ensure speedy and efficient collection of invoices. Whilst this is obviously of benefit to the agency itself, it also ensures that the company’s customers are not put off by poorly executed attempts at chasing payment. Export factoring agencies can also offer certainty when paying out in different currencies, often reaching agreements with recipient companies which operate to smooth out any currency fluctuations and ensure a specific receipt. Most such agencies are also able to conduct international credit checks, so that the recipient company is assured that they are dealing with reliable customers, and the agency knows that it will be able to collect invoices easily.

Companies which operate internationally are also increasingly able to benefit from so-called trade finance, which essentially operates as the reverse of export factoring and is of particular use for companies which buy from abroad and then sell goods on to third parties. If experiencing cashflow shortages which make the initial purchase difficult, trade financing agencies can offer full payment to your supplier in return to the rights over the invoice which you send to the third party customer. Since the agreement provides up-front cash which is tied directly to the purchases being made and which is instantly redeemed by selling on to a third party customer, businesses engaged in foreign trading can smooth out any cashflow issues they experience. This method also assures that the recipient company will not get into unsustainable debt or find itself in any long-term financial difficulties.

Trading abroad no longer needs to be risky for small companies, nor does it require a significant traditional loan in order to be viable. If you are willing to experiment with innovative new forms of financing, cashflow problems never need to be an issue again.

We can offer you financial solutions to help keep your cashflow healthy. Request a quote now to find out how much invoice finance can save you.


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