What is Export Bill Discounting?

In the business of exporting, owners understand the need to reach a wide customer base without going over their budget. Companies involved in exporting goods and providing services around the world not only make it possible for trade to exist, but also help facilitate the spread of ideas, communication between cultures, and much more. In order to sustain and maximize the opportunities for exporters to participate in global trade, funding from such sources as international trade finance companies like Tradewind is often necessary.

It can be difficult to break into the business of exporting when a business lacks the capital to do so. Without access to working capital to make investments in new markets, many businesses find themselves stagnating in their existing one, unable to grow.

Export financing, including factoring and export bill discounting, helps businesses obtain the working capital they need to expand into other countries. Export bill discounting is one form of funding that international trade finance companies offer businesses in order to expedite the payment process and get businesses on their way to continued success.

Export Bill Discounting

Export bill discounting is an international trade term and practice. Export bill discounting is designed to allow businesses faster payment for the goods they have shipped to the buyer. Export bill discounting occurs when a business contracts with a buyer for their goods on credit. In international trade, this can be called a letter of credit, and a third-party financing company uses this agreement to determine the export bill discount amount.

When a business and a buyer agree to the terms of an export contract, their respective financial intermediaries issue the proper payments when the contract conditions are met. This means early payment for the exporter issued by their financial intermediary, who then collects payment from the buyer’s bank at a later date based on the agreed upon payment terms. A business is, therefore, better able to negotiate with a buyer and expedite the payment process through export bill discounting. With this agreement, the financial intermediaries of the export business and the buyer work together.

The export business can be paid once they have furnished the customs and export documents showing that their items are on the way to the buyer. The exporter’s financial intermediary  assures the credit agreement for both parties and facilitates the quick payment to the exporter once the goods have been shipped.

International trade finance companies are an important aspect of international trade transactions. Companies like Tradewind are able to provide a bridge between export companies and buyers to facilitate credit agreements, offer credit protection, deal with currency differences, provide quick payment of invoices, and more.

Exporting goods to another country can involve a greater financial investment than selling goods domestically; therefore, expediting payment can enable a business to grow so that they can engage with new markets and continue to expand.

Benefits of Export Bill Discounting

There are many benefits to export bill discounting in international trade. This practice allows export businesses to get paid quickly upon the shipment of their goods to a buyer. Instead of having to wait for a buyer to get the shipment, process it, and sell it, then get paid, an exporting business just has to furnish customs and shipping details in order to receive payment.

This practice enables businesses to generate more working capital quickly so that this money can be used to continue growing and taking care of the daily running of a business. Export financing also simplifies complicated international trade procedures, which can be prohibitive for businesses that aren’t prepared to deal with an entirely different money system or financial culture.

Finally, there are fewer financial expenses with export bill discounting. Businesses can determine what currencies they want to work with, depending on what countries they are exporting their goods to, which is beneficial to them. Instead of waiting for payments to clear multiple banks, shipments to arrive in other countries, and businesses to sell goods, exporters  can rely on advanced payment  based on the credit agreement already put in place by the exporter and the buyer.

Tradewind Finance

Tradewind Finance is an international trade finance company specializing in export factoring, supply chain financing, and more. Clients from a variety of industries rely on them to simplify complicated international financial procedures and make it easier to accelerate cash flow for their businesses located around the world. Tradewind offers financing, credit protection, collections, and more for global businesses involved in import and export trade.