The success of a business is defined by multiple critical aspects – a foundational idea that has the potential to stand the test of time, a comprehensive plan that serves as a roadmap to bring this idea to life, and a team of experts that excels at working collaboratively. Most importantly, gaining enough capital at the right time and maintaining a steady cash flow is essential for business growth.
In a highly competitive market, capital is key. Lack of capital means fewer opportunities for business growth as there is little to no funding to increase production, build inventory levels, or extend payment terms in a global supply chain. When it comes to financing for export businesses, there are several options. However, only a handful provide exporters with enough flexibility to manage cash flow seamlessly.
With conventional financing institutions like banks or loan sharks, there are certain limitations. The business may not be eligible for bank loans. In addition, the invoicing process can be a tedious one, especially if the right documents are not in place. This is where export businesses can bank on trade credit to escape the hassles of traditional financing.
With trade finance, exporters get paid right after they ship the goods and the buyer can pay later. Trade finance provides exporters with excellent flexibility in terms of controlling finance in the pre-shipment and shipment phases as well. Apart from offering exporters and manufacturers enhanced flexibility in terms of payments, it brings them multiple other rewarding benefits.
Solutions provided by trade finance companies facilitate a seamless experience for organizations looking to acquire capital to expand their business globally. The application process is often seamless and the approvals are quick. Let us take a closer look at the advantages of trade credit.
Trade Credit: How Does It Help?
When it comes to the export industry, most of the capital is heavily dedicated to the inventory that is currently in production as well as the invoices to be paid. Unlike traditional financing options, NBFCs now design their solutions in a way that addresses the key challenges of global exporters. Here is how trade finance is helping companies who aspire to conduct business across borders:
1. Export Financing:
Export finance provides businesses with working capital while they wait for the invoices to be cleared. Each economic year brings a new wave of changes and fluctuations that affect businesses belonging to the export industry. The retailers must alter the prices of the product to better suit the changing demands. During the slow periods in the year, the reduced prices of the products can significantly hamper their profits.
This is where trade finance comes to the rescue. With trade finance, exporters get easy access to post-shipment finance to offer extended payment terms to retailers. This way, they have a longer sales window to maintain profits.
2. Vendor Financing:
After the successful launch of any product, the next big challenge is to consistently meet the rising demand for the product. There are instances where the signs of inventory level depletions are quite evident. However, the current budget leaves no room to address the inventory predictions in the coming months.
In addition, most suppliers require payment before the shipment can move from location A to B. Trade finance companies can provide scalable export and import finance solutions, allowing businesses to optimize finances by providing quick and hassle-free solutions.
3. Export Factoring:
With quick factoring solutions at their disposal, export businesses no longer must wait lengthy periods for customers to pay them. Factoring companies have the potential to solve short-term cash flow issues by purchasing a company’s accounts receivable in exchange for an advance on most of the total invoice value.
The factoring firm then collects the full amount from the client or customer upon invoice maturity. Once the invoice is paid in full, the business in question then receives the remaining balance. Unlike bank financing, trade finance can provide off-balance sheet funding meaning that the funds will not be reflected as debt in the ledger.
4. Currency Protection:
Trade finance companies are adept at managing international currency costs and transactions, saving the business from the brunt of currency exchange rates that are privy to extreme fluctuations.
If your business involves trading in two or more currencies in a global market, then a reliable trade finance partner can help ensure currency protection. The right solutions can help eliminate the risks resulting from currency exchange.
5. Inventory Financing:
Managing inventory is of key importance to the success of a business, especially if it deals in goods that have a large and liquid market. With trade finance, firms get access to quick financing against their standing inventory.
Longer payment terms extended to retailers are critical for business growth. Reducing payment terms can result in retailers choosing to work with new suppliers. Inventory financing can help companies welcome a consistent flow of working capital. Businesses can then keep up with the increasing orders, thereby maintaining their growth trajectory – all while maintaining good relations with retailers.
Leveraging the power of trade finance can enable your business to climb the ladder of success at a speedy pace, and excel in a global world. Factoring companies in India help growing businesses manage the risk of not receiving payment for exports. With over 20 years of experience in trade finance, Tradewind is one of the leading invoice factoring companies in India.
Scale Your Exports Seamlessly with Tradewind Finance
Scale your export business with Tradewind – our experts will guide you through the best solutions tailored to your requirements. Trade finance companies like Tradewind offer trade finance facilities in multiple currencies, eliminating the risks resulting from currency exchange. Our global presence spans 14 countries across 4 continents.
Our services bring you the best of both worlds – Fintech and Banking, minus the complications. Representatives at Tradewind are multicultural and fluent in over 15 languages, serving clients in more than 30 countries. We provide flexible financing solutions to companies belonging to diverse sectors – Automobile, Apparel and Textile, Industrial and Mechanical, Food and Beverage including Seafood, Electronics, Gaming & Media, and more.