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 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.