Invoice Factoring for Import-Export Companies
Cash flow is the lifeblood of any company; however, it isn’t always easy to manage. Securing capital for a growing business is easier said than done, especially in the import and export sector, where international laws, tariffs, and procedures compound the challenges in accessing working capital.
Exports invoice factoring – sometimes referred to as international factoring, foreign accounts factoring, or import-export factoring – can help eliminate the inherent cash flow bottlenecks in this industry.
Import Export Factoring vs. Bank Loans
International or cross-border trade demands fast cash flow. Unfortunately, the industry is renowned for longer payment wait times due to the lengthy export process and all the compliance requirements. Additionally, numerous banks and other traditional lenders strictly limit the levels of import and export financing they are willing to approve because they view it as too risky. This is the same reason many factoring companies also avoid the international trade industry.
However, the factors that do offer import and export factoring services are fully aware of the risks involved. An experienced import or export factoring company will be able to navigate the different time zones, language barriers, and international tariffs involved in collecting payments from your customers and know exactly how to operate so that their business is protected and yours.
International factoring involves selling your foreign accounts receivables to a third party (factoring company) at a discounted rate. You will receive a percentage of the invoice value upfront and be able to continue and grow your business operations. This type of service provides quick and flexible access to working capital by eliminating the long wait for importers to make payments. International factoring can be a great alternative to bank loans, bank financing, and other financing options that have high-debt costs.
Investing in export and import financing can help your business overcome its financial challenges and risks – allowing you to focus on what you do best: buying and selling abroad.
Top Financial Challenges in the Import-Export Industry
How to Run a Successful Import Export Company
Canada is one of the cheapest countries in the world to do business but exporting can be very expensive due to how quickly the costs add up and the large number of unforeseen or fluctuating costs. This is why export and import operations need reliable cash flow and comprehensive financial plans. To run a successful import-export company, you need to:
Exporting is a time-intensive process, and this can result in slow capital circulation, which results in higher costs and missed sales opportunities. Invoice factoring can help make your cash flow more predictable, and because you won’t have to worry about short-term cash flow as much, you will be in a better position to extend favorable payment terms to your customers and extend your competitive advantage.
Financing Options for Import Export Companies
We have established that cash is king, and without effective financing solutions in place, your import or export business will not be well-positioned to combat the numerous risks in the industry. So, what financing options are available?
Your industry has its unique cash flow challenges, and you want to partner with someone who understands your financial needs and business model. If you’re in the import or export business and are looking to boost your cash flow, speak to an industry-specific factoring company about your financing options.
Browse our Factoring Guide to discover what you should look for when selecting the best factoring company to partner with or request a quote for invoice factoring for import-export companies today.