• Jun 8

    export-finance2Global expansion has been the great entrepreneurial dream on top of profitability. Success in both domestic and international markets spell sweet victory and everybody wants it. But the lure of exportation is a long, winding and bumpy road. It comes with risks and not to mention added financial resources. This is where export finance comes in.

    Export finance allows businesses to advance the value of foreign sales on credit thereby enabling them to realize cash prior to the invoice’s maturity. By hastening collection it minimizes credit, interest rate and foreign currency risks. It likewise improves cash flow, strengthens working capital and improves liquidity all while incurring no debt, interest and collateral as it isn’t a loan but an asset transaction. Moreover, several administrative tasks especially those as pertaining to collections shall be shouldered by the provider.

    The great thing about export finance is that unlike most types of financing available on the market, it remains non-discriminatory in the sense that it’s not exclusive to established entities alone. It may likewise be used by small to medium scale enterprises, startup businesses and recovering entities. The application process is faster with lesser documentary requirements to prepare and submit and as mentioned earlier, it’s not a loan to begin with.

    But why should entrepreneurs consider exporting in the first place? The benefits of expanding globally are aplenty and here are only some of them.

    1. It opens up and widens one’s market or client base. Although a company may already succeed domestically, its operations and profitability is limited because there can only be so much customers in a specific location.

    2. Unit costs are lowered and assets are maximized. In cost accounting, the higher the output of production the lower per unit costs are. Moreover, higher production maximizes the capacity of one’s assets and equipment thereby making more value our of them.

    3. There is risk diversification. Remember the eggs in a basket principle? If you put them all in one basket then chances are you’ll lose everything if the container breaks. The same applies in business. As domestic and international sales are not directly proportional and risks vary from country to country, poor sales domestically may be compensated for a strong international demand and vice versa

    4. Enjoy less seasonal losses. When it comes to products and services, businesses experience slopes and plateaus. Seasons are a factor here. For instance, iced drinks may not be highly sold during the winter months in South Korea but may be profitable all year round in the Philippines. Because countries vary in time zones, climates and seasons, businesses can avoid suffering from certain losses due o seasonal demand fluctuations.

    And when you’re ready to dive into the foreign market, remember that export finance has your back.
    http://workingcapitalpartners.com/

  • May 15

    export-overdraftIf there’s one thing that all entrepreneurs have in common, it’s the pursuit of global expansion and success. It is likewise for this reason that the industry of export overdraft financing has experienced a massive boom over the past decades. As one of the most effective, efficient and affordable methods of raising capital and avoiding risks altogether, business entities have sought it without avail.

    But what exactly comes with global trade that makes it a risk worth taking? We all know that exportation takes not only time and effort but a lot of money too. There has to be a valid reason as to why companies always pursue it as a long term goal. Today, we’ll discuss such reasons with the following list.

    1.    Market – Perhaps the most obvious of them all, the expansion of one’s audience is what businesses want. There’s nothing wrong with local or domestic operations, none at all, but it can become claustrophobic in a sense that success is boxed and dependent on one market alone. With exporting, the customer base can be expanded to cover not only similar demographics. It can allow the entity to tap on new markets thus allowing for more sales and profits.
    2.    Sales – A bigger audience calls for more sales which is the primary goal of global expansion. With the right factors in play, this will eventually constitute to profits in the long run. We all want that, don’t we?
    3.    Risks – Having more than just one audience base helps better diversify risks. Because not all markets and economies will function and move the same, this allows businesses to suffer lesser risks and losses should one market slow down or fall flat. In other words, they get the convenience of fall backs.
    4.    Costs – In terms of cost accounting, the higher production output is, the lower the per unit cost becomes. This helps not only save resources but it likewise maximizes the use of machineries, equipment and other assets. It’s no secret that these depreciate overtime regardless of how much output they churn out.
    5.    Losses – Exportation also helps minimize if not eliminate what we call seasonal losses. Many companies can suffer slow months due to a change in season or the weather as trends and needs will shift. For instance, a Canadian based swimwear company may not be able to enjoy promising sales locally during winter but if it is able to tap other markets say in the tropics or anywhere where it’s summer, it is able to lessen the losses it would have suffered.

    With these reasons, more companies have tapped the export overdraft financing to enjoy the above benefits of global trade and success.

    http://workingcapitalpartners.com/

  • Nov 15

    As a business owner, you have probably heard about different types of finance such as those based on equity, assets, receivables etcetera. Now, when you want to take things up a higher notch and on a global scale then you would have to consider export finance. What is it then?

    export financeExport finance enables companies to bring their products and services abroad and in all other parts of the globe. Being able to do so is considered a big step and a goal achievement for most if not all entrepreneurs. Besides, the ultimate goal of going into business is profits, growth and expansion and broadening your horizons on a global scale is definitely part of these goals. At the same time, putting your products and services on a bigger and global market comes not only with profits and opportunities. There too arise costs, expenditures and various other risks. In terms of risks, these need a lot of careful analysis, research and study to determine whether such venture is indeed promising and effective. When you talk about the costs, there are a lot to consider in this department. To name a few there are taxes, duties and the shipping of raw materials and finished goods. All these have to fit in your business plan and budget otherwise an export venture may be turned down by your board of directors.

    Now, for those companies who are willing to take the risks to earn their place at the global market, export financing can surely help especially regarding your need of financial resources.

    One option is those loans provided to companies for the purpose of transporting or bringing their products abroad. There are terms to it that both parties, especially the borrower, must uphold otherwise the lender will have the right to demand the full amount owed and ask for it to be payed at once. These are often secured with collateral the amount of which depends on the loan granted.

    Another option is by using an overseas factoring house. This firm or company will purchase the products at a discount that is below the invoice’s value. They will then sell these to prospective buyers who are either the ultimate consumer or a reseller at a mark up.

    Export finance is one good way for businesses to fund their global projects and ventures. After all, risks have to be taken to gain profits.