Many businesses sell goods or services to companies in other countries. Even though, it is so exciting and gainful to expand your company beyond your national borders. Moreover, it will also subject you to the payment habits of your foreign customers. Customers can take as long as 60 days to pay for their goods. But large export companies can wait that long to get paid, most small and medium sized businesses can't. Nevertheless, this creates a cash flow problem.
You can always ask your customers to pay you immediately by bank wire as soon as the invoice is presented. Nonetheless, few customers will abide by that request and you risk loosing business to the competition.
Go to the bank and get a business loan or some business financing. But it will help if your business is established, can provide three years of financial statements and if your personal credit is stellar. But you may be a startup. Thus, you should think over trade finance. With trade financing you can finance your local and foreign sales. Besides, you can be provided the working capital that your company needs.
With such finance tool as factoring receivables you can get paid for your export invoices in as little as two days. Besides, it eliminates the 60 day payment wait and allows you to get your paid immediately. Thus you will be provided with working capital to pay suppliers and employees.
Being simple to use, export factoring integrates well with most companies. So, it works as follows:
• You deliver the goods or services to your foreign client and send an invoice.
• Then you send a copy of the invoice to the factoring company.
• You are advanced up to 85% of your invoice as a first installment.
• One your invoice is paid, the factoring company will rebate you the remaining 15% as a second installment, less their fee.
Factoring financing is easy to get and can be setup in a few days. Thus this makes it an ideal solution for small and midsize companies.
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