Export Finance: Benefits, Eligibility & Application Process

Owing to globalization, companies are now aiming to grow beyond boundaries by taking their business to international markets brimming with rewarding possibilities and opportunities. Needless to say, global aspirations come with certain challenges. However, the benefits effortlessly outweigh the hassles. Moreover, companies belonging to diverse sectors are now seeking quick solutions to grow globally, and make a lasting mark overseas before their competitors do.

When it comes to seamless international trade, tools like Export finance prove to be a blessing. Export finance, also known as factoring finance or account receivable financing, is an excellent solution that exporters can use to conduct trade with international importers or buyers. It gives them easy and quick access to working capital without having to wait for their buyers to clear invoices.

How Does It Work?

Export finance is ideal for SMEs (small- and medium-sized enterprises) that need funds but have limited banking facilities or an undocumented credit history. Chasing late payments becomes the financier’s responsibility, to a great extent.

To attract importers, exporters often draft payment terms stating that buyers can have longer payment cycles. However, this also means that they have to manage a financial gap between shipping the goods and receiving payment for them. To arrange finances to keep the business going during this waiting period, exporters can turn to Export financing.

They can submit unpaid invoices to a finance provider that will grant them a percentage of the total invoice amount as an immediate payment. The buyer is then liable to pay the financier instead of the exporter. Once the invoice is cleared by the importer, the finance provider then pays the remainder of the money to the exporter, minus the service fee that is agreed upon by both parties at the time of contract signing.

Benefits Of Export Finance

Export financing brings a host of benefits to global suppliers. It helps companies maintain a steady cash flow, improve collections, and have preventive measures in place to handle debts. They can make the most of every opportunity that comes their way to generate more sales by offering longer payment terms to buyers without running low on capital. Here are the key benefits:

1. Exporters get quick access to finances that would otherwise be tied up for months on end.
2. They can use these funds to build growth strategies for the company, as well as invest in new tools and technologies to accelerate this growth.
3. The granting of finances is based on individual invoices and not the exporters’ credit history.
4. As soon as invoices are settled, the remainder of the payment is made to them by the financier.

Are You Eligible For Export Financing?

It is important to check the terms and conditions of the financier you are considering to know if you are eligible, as it can vary from provider to provider. To be eligible for Export financing with different lenders, exporters have to meet some criteria. Generally speaking, Export finance is available to exporters who trade globally, and have to grant longer invoice payment terms.

In some instances, exporters also have to provide proof of the minimum percentage of revenue coming from exports or submit unpaid invoices. To qualify for Export finance via conventional means such as banks, exporters may have to meet additional criteria, such as a positive credit score or proof that the company is making enough revenue to repay loans.

Leverage the Power of Export Factoring with Tradewind

Tradewind Finance specializes in cross-border transactions and finances trade globally for sales made on open accounts, letters of credit, and documentary collections payment terms. We solve short-term cash flow issues by purchasing your company’s accounts receivable in exchange for an advance of up to 95% of the total invoice value. We then collect the full amount from your client upon invoice maturity. Once the invoice is paid in full, we send you the remaining balance.

Why Choose Us?

With an emphasis on streamlining company cash flow, Tradewind offers non-recourse financing solutions, providing quick working capital for our clients. You also get the flexibility to choose the best avenue to make the most of Export finance:

1. Export Factoring on Open Account Terms:

We first inspect the creditworthiness of your buyer and set a credit limit on them. Then, we buy your accounts receivable and pay you generally within 24-48 hours of invoice submission. We handle the management of your accounts receivable and the complete dunning process. In case your customer cannot pay due to insolvency, we will pay you (non-recourse).

2. Export Factoring via Payment Against Documents:

If you sell on documentary terms, we will advance the funds and handle the bank collections process.

3. Export Factoring via Letter of Credit:

Your buyer opens a letter of credit with us, which guarantees you are paid if the terms and conditions specified in the letter of credit are fulfilled.

Here are some of the other key advantages of choosing us as your Export financing partner:

1. Our services are not like loans. As such, for most companies, our financing does not show up on your balance sheet as debt.
2. The application and set-up processes are faster and easier than when applying for a bank loan.
3. We primarily finance based on the quality of your customer’s credit, not based on your financials.
4. You have peace of mind as we monitor the creditworthiness of your customers and assume the risk of a shortfall of payment due to their insolvency.
5. You get paid within 24-48 hours of invoice submission instead of in weeks or months, or even faster in some cases.
6. You can offer longer payment terms, and therefore are more likely to attract larger buyers.
7. You have a streamlined workflow as we perform collections, dunning, and bookkeeping on your behalf.
8. Our local experts comply with the regulations of each country we operate in and offer appropriate services such as currency regulation control.
9. Our financing solutions can be tailored to your company’s needs, and can be scaled to keep up with its growth.

In addition to factoring your export accounts receivable, we can also finance your full supply chain. Our global supply chain finance programs can support facilities based on payables, receivables, and inventory. Using purchase order funding, inventory lending, letters of credit, and structured guarantees, our financing helps align the needs of both buyers and sellers.

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