As businesses seek to grow and various enterprises aim for global expansion, the need for export finance has increased exponentially. Although there are various other funding methods available in the market, entrepreneurs have continuously sought it for its benefits.
Ever wondered if export finance is for you too? Well, take a look at this list and discover for yourself.
1. Free of Bias
Unlike other forms of financing, it remains relatively unbiased in a sense that it’s not exclusive to established companies. Startups, small to medium scale enterprises, conglomerates and even recovering entities alike can make use of it. This is because providers bank not on the business’ creditworthiness but instead that of the customer to whom the export sales invoice/s is attached to. This brings us to our next point.
2. Zero Collateral
Export finance is very useful for entrepreneurs who do not pass the usual standards and asset level requirements that other options require. For startups most especially, property collateral can be a huge problem because they are still at the infancy of their operations. There’s not just enough assets to constitute as collateral. Luckily, the method doesn’t require one.
3. Faster Collections
Most importers and foreign customers choose to defer payment. Oftentimes, these transactions fall under sales on credit and actual cash payment is only received upon complete delivery or until goods have been resold by said importer. This creates receivables, which although are assets, lock up cash in invoices for prolonged periods making them unavailable for immediate use. Export finance allows the advance of their values prior to maturity thereby releasing cash almost instantaneously and improving liquidity and working capital in the process.
4. Lesser Risks
Another daunting feat that many exporters face is financial risks. There’s credit risk which pertains to possible losses due to late or no collections, interest rate risk that refers to the fluctuation of rates in the market and foreign currency risk that can signify losses due to the rise and fall of exchange across currencies. Because of the advance, export finance helps avoid and minimize all these.
5. Cost Savings
Last but not the least, export finance allows companies to save not only bucks but also effort. Because providers will not only provide an advance of the invoice values but will likewise take care of administrative duties like collection, entrepreneurs get to save on the additional costs that would otherwise be necessary for those tasks.
Find out more on http://workingcapitalpartners.com/solutions/export-finance.