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Export factoring & discounting

Export factoring or confidential invoice discounting involves the collection of debts by a factoring company on behalf of an exporter often in the debtors language and currency.

Most international factoring or invoice discounting is carried out through a network of factoring and invoice discounting companies. Two common export financing arrangements that factors offer. Collection factoring: the factor pays the exporter, less a commission charge, when receivables are due (or shortly thereafter), regardless of the importer's financial ability to pay. Cash in advance, or discount factoring: the factor issues an advance of funds against the exporter's receivables until money is collected from the importer.

 

• Export factoring is great for the new to export companies. Invoice discounters and factors generally will not take on a client for a one-time deal.
• Invoice discounters and factors generally do not work with receivables having greater than 180-day terms.
• Invoice discounters and factors do not work with developing countries, because of their inadequate legal and financial frameworks.
• Invoice discounting and factoring allows the export buyer to purchase on open account terms, which does not tie up existing credit lines for either the importer or the exporter
• By providing a means of turning receivables into cash,Invoice discounters and factors eliminates the cost of collections and the risk of bad debts for the exporter.

What is right for you? Contact us. Want to know more try our FREE "Exporters - foreign exchange calculator" model the impact interest rate fluctuations could have on your trade cycle.

 

If your company suffered a £150,000 loss, and your pre-tax margin is 7.5%, you would have to do £2,000,000 in additional sales to break even. Yet accounts receivable is usually the only major asset not routinely safeguarded against catastrophic loss.

 

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