 There are the three biggest costs that most business owners face. These are: paying employees, rent and suppliers. In case you are a wholesaler / reseller and buy and resell goods, then your biggest expense is likely to be supplier payments. But providing services, your biggest expense is likely to be payroll. However, making sure that your suppliers and employees are paid on time is important. Getting an infusion of working capital is the solution to these challenges. And in this case trade finance can help you. With trade financing you are assured that you always have the funds to pay employees and suppliers. Moreover, it allows you to have the resources to grow your company.
You may have clients that take 30 or more days to pay their invoices. You also may be a distributor. Moreover, you may have clients that have placed large orders, depleting your capital resources. In these all cases two trade finance tools can help you. So, the first tool is called factoring financing. And the second one is called purchase order financing.
Factoring Financing
There are companies that can’t afford to wait up to 60 days to get paid by clients. And factoring is the perfect financing tool for such companies. You can be provided with an advance of up to 85% on your slow paying receivables by a factoring company. It also provides you with working capital to pay employees and business costs. As factoring receivables is quick, they can provide you with a payment within a day or so after invoicing. Besides, factoring also works as an export financing tool.
Purchase Order Financing
Companies that resell goods to government or commercial clients have the best tool that is PO financing. With it, you can be provided with financing you need to deliver on your large orders. Moreover, it provides you with funds to pay suppliers, enabling you to close more and larger sales.
So, you see that purchase order financing and factoring are the best ways for companies that need either domestic or import export financing. Unlike traditional bank financing, both are relatively easy to get and can be set up in a few days.
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