Posts tagged: export financing

Kinds of Export Funding

export fundingInternational trade is no doubt part of any entrepreneur’s long term goal. It spells bigger markets, more sales, risk diversification and asset maximization to name a few. But benefits aside, it also comes with its own set of challenges one of which includes export funding.

It’s true that resources, a lot to be exact, are necessary when venturing into the global market. With factors like shipment, customs, tarriffs, taxes and added administrative and operational costs, business owners need to identify their needs and trace which export funding options will suit each one best. To help with such endeavor, we’ve listed down some of the most apt and effective options. Read on and discover what they are.

1. Bank Loan

Bank loans involve significant and huge sums borrowed from a bank or similar financing institution. A long term type of credit, it often spans from five to twenty years and sometimes even more. It has a stipulated maturity and is to be repaid on set intervals over the course of the period with interest. Because of its size and length, it requires property collateral and involves scrupulous and meticulous application.

2. Mortgage

This is somehow similar to bank loans in terms of length, payment terms and amount. The difference lies in the fact that where bank loans can be used for whatever venture, a mortgage is specifically taken out to purchase real estate properties.

3. Bridging Loan

Unlike the first two, a bridging loan is a temporary and short term financing. It is a type of interim financing thereby one taken out to fulfill and provide for immediate short term liquidity needs pending the approval and/or availability of a permanent and bigger funding source such as a mortgage, bank loan, sale proceeds, income or the like. It is most popularly utilized to provide for down payments and other immediate expenses.

4. Receivables Financing

This makes use of a company’s receivables or sales invoices to draw cash. It works by advancing the value of the invoices before their scheduled maturity date in exchange for a fee which is often a minimal percentage of the total receivable value. Receivables financing has two main types namely factoring and discounting.

5. Merchant Cash Advance

This last type of export funding option is one that makes use of credit card sales. It allows businesses to borrow a certain sum with the payment as a percentage of every month’s total credit card sales. What make this a great method is that the level o payments is directly proportional to credit card sales thereby allowing the business to pay only up to what it can afford to.

Export Funding

On this page, you will learn more on export funds.

What is Export Finance and How Does it Differ from the Rest

You may have already heard about export finance and export overdraft but never really got to know what it is and what it does. Well today is the day that you find out so go on and read. You need to add to the cornucopia of your knowledge. Besides, you never know if you might actually need one in the future. It’s always best to be aware of your options.

First of all, it is designed to be furnished by small and medium scale enterprises that delve into the export market. Moreover, it is also used to support a growing entity’s cash flow needs especially when its export operations are deferred or prevented by strict supplier terms and the delayed payment by owing customers.

By now, you may already know that cash flow problems can deter and derail any company’s plans of expansion and growth. Even its regular operations can be disturbed and made unfeasible. Just because sales are up does not exactly denote the presence of liquid resources and actual cash. Plus, most suppliers have requirements that have to be complied with first in order for them to extend credit to companies.

The aforementioned dilemmas can be a huge hiccup to the export plans of a business. The opportunity is great and the returns are promising but there are road blocks. So how do you remove these boulders from your path? The answer is export financing.

export fundExport financing helps entities sell overseas and export their goods without the complications of the usual paperwork and the risks of not being able to collect. As an entrepreneur, these two are huge dissuasions to one’s plans and if they can be overcome with then the better.

In an export financing arrangement, payment for the goods and/or services provided are attained with the help of a financial facility or company that have expertise on the said service. Companies can go on and export their offerings in other countries and the facility will take care of the collection and in the assurance that documents, paper trail and collection are achieved. Of course, a fee will be required in exchange of the service but knowing the nitty-gritty and bloody transactions and requirements that one would have to do if one chooses to do the process on their own, the fees are very well worth it. After all, you have to aspire for growth and you can’t do it if you stay in one place forever.

If you want to know about how export finance works, click this page

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