The Benefits to Your Business and Your Customers of Export Factoring

 

We saw earlier how negative cash flow from both your perspective and that of your overseas customers has the potential to hamper the development of your own business. So lets consider how export factoring can help you and your customers by providing you both with POSITIVE CASH FLOW.

Under an export factoring facility, the power comes in by means of being able to use an international network of factoring companies working together across the developed world. Local factoring companies liaise with their counterparts overseas to manage the risks of international credit management. Here's a simplified version of how export factoring works from your company's perspective (you can see a more in-depth version in the process of export factoring section.

 

  export factoring = positive cashflow

 

Here's how it works:

 

  • 1. You ship your products overseas.
  • 2. You raise your invoice and send a copy to your local factoring company
  • 3. The factoring company advances you up to 85% of the invoice value up front
  • 4. The details of the invoicing are sent to the import factor
  • 5. Your customer pays the import factor directly.
  • 6. The import factor pays your local factoring company
  • 7. The remaining 15% of the unfunded potion of the invoice is returned to you by the factoring company .

 

A more extensive examination of how export factoring works be seen in the next section

The Export Factoring Process .

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