Factoring and Invoice Discounting Helpline

Getting paid on time and ensuring an export business has cashflow is one of key steps in running a successful exporting business. The delay between the shipping of goods and your receiving payment for them will affect your cashflow. It's worth discussing factoring or invoice discounting to alleviate any problems with an export company cash position.

Businesses that sell on credit to foreign customers can use factoring or invoice discounting to free up cashflow. Export factors specialise in the collection of money from overseas. The factoring company pays you a percentage of the invoice value up-front and the balance (less their percentage) once they have collected payment.

Costs and money issues relating to export companies.

It's important to insure your business against not being paid in case one of your overseas customers goes out of business. The Export Credits Guarantee Department (ECGD), run by the government, may be able to offer insurance and advice, depending on the type of export.

There are also currency issues you need to consider. Some of your customers could face problems obtaining foreign currency to pay for your exports. In this case, it's worth insisting on a (confirmed) irrevocable letter of credit that secures payments according to the terms of the credit and often at an agreed rate. Other considerations are as follows:-

• Understanding export trade barriers
• Export company paperwork
• Export company market entry
• Export company licenses
• Export trade tariff
• Export Vat, excise & duty
• Customs declarations
• Certificates and notifications
• Preparing goods for transport and export
• Costs relating to the transportation and export of goods
• Costs relating to identifying and managing export risks
• Costs relating to export or import licenses
• Import and export licensing for controlled goods
• Costs and expenses of health and safety
• Costs relating to managing the risks of crime in international trade business
• Costs and expenses of customs procedures
• Costs and expenses of moving goods for export.

Factoring as an option for an export business

Timely payment is essential for the survival of your business, especially when you're trading overseas.

Financing your export activities can place a strain on your cashflow, so it's crucial to keep control of the payment arrangements you make with customers and use proper credit control procedures. Taking legal action to recover unpaid debts might be expensive or even impossible.

Ensuring you get paid for overseas sales is a combination of assessing risk, settling on acceptable payment terms and methods and considering insurance to protect yourself against problems.

An export business needs cash to keep it viable. Factoring may be the ideal solution. If you run an export business and are thinking factoring as a solution to cashflow then please call us to discuss an invoice discounting or factoring facility. Call 0800 597 4757 or apply online.