Six Lesser Known Features of Export Finance
Surviving the competition and gaining an edge over your peers is no child’s play. Every business is growing rapidly and you better pull your socks and enter the competition if you want to keep your profits intact. Expanding your brand and establishing better trade relations with the other nations is the first step to success. Export finance is one of the most important things that will help you achieve this goal. Here are a few of the top ways in which international trade financing helps you get a better hold of the market;
Reduce Financial Risks
With export financing, the risk of fraud and delayed payment is considerably reduced. This is because the financial risks of the transactions are taken care of by the bank. The bank acts as a guarantor in case of a breach in the agreement.
Reduce Pressure on Exporters
Export financing facilities reduce the pressure on both the exporter and the importer. The client or buyer has the assurance that the payment will be completed while the seller can rely on the word of the bank that he will receive the money. It is a smart way to establish a sense of peace and harmony between the two parties
Involves Various Trade Instruments
There are various financial instruments and facilities like promissory notes, bank drafts, letters of credit and SBLCs that give the company more backup and monetary support. The terms of the agreement are stated in these documents to reduce the chance of any future dispute or misunderstanding
Factoring
Factoring is a common technique among exports who want to improve cash flow in their business. Here the exporter agrees to sell his open and payable invoices to a bank or other financer at a discounted price. In exchange, the exporter earns some quick liquid cash and also gets to relieve their and bad debts.
Forfeiting
Forfeiting is an agreement between the exporter and a forfeiter who purchases all the accounts receivable of the company in exchange for some quick cash. This is a good way to get some liquid cash and transfer all the debt to the forfeiter.
Creates New Opportunities
With export financing, there is also an increase in job opportunities and facilities that open up for market experts and professionals. Capital is one such reputed platform that offers clear and comprehensive services and monetary support to business holdings. If you wish for a transparent and hassle-free monetary service, this will be the best option for you!