Financing the purchase of overseas goods as well as that of export sales can be a challenge for many companies. Consequently many organisations decide not to trade overseas or to restrict their trading overseas despite the outlook being very promising.
The good news is that Export Finance is not only available from the banks.
As well as your bank there are several independent Funders that can provide funding for both the purchase of overseas goods and the financing of an export invoice worldwide – at an agreed advance percentage rate.
Even though you may have an existing funding relationship you can still secure alternative finance for an overseas transaction or transactions that would not conflict with your existing arrangements.
Trade Finance provides funding or guarantees for the purchase of overseas goods. Typically, the Trade Financier would pay your supplier in advance for the goods on your behalf and you in turn would pay the funder 90 days from this date.
A supplier of women’s garments was successful in securing a €250,000 order from a European retailer. However they did not have the available working capital to pay their supplier for the goods.
They approached an independent Trade Financier who agreed to pay the supplier in advance on their behalf and offered them in turn 90 days from receipt of the goods to pay back them back the amount being advanced.
Without this funding the UK Exporter would have missed out on these additional sales and profit. Moreover this arrangement did not conflict with their existing invoice banking arrangements.
The funding of domestic sales invoices is common practice for many UK companies. However many of these financiers will restrict the percentage advanced for export invoices to as little as 40% of the invoice value.
However, there are Export Receivable Finance providers that offer 80% advanced funding for approved export transactions.
Typically, the Financier would advance 80% of the gross invoice value on receipt of an approved invoice and in turn you will benefit from 90 days from the end of the month (maximum 120 days) before this invoice needs to be paid back to the Funder.
A supplier of frozen food was successful in securing a contract to supply an oversea restaurant chain with €175,000 a month of goods which were typically not held in stock.
Unfortunately, the company did not have the working capital to fulfil the contract and their current Financier was only prepared to advance 40% of the invoice value.
They approached an alternative Specialist Export Invoice Financier who was prepared to advance 85% of the ongoing invoices. This provided the required working capital to secure the contract.
We hope you have found this information useful. It’s likely you will have questions that require answers tailored to your exact situation. Please get in touch if this is the case.