• Things to Note When Dealing with Export Finance

    Filed under export
    Mar 19

    If there’s one way to diversify a business, that would be to take on other markets, expand product life cycles and look at offshore ventures. But as we should all know by now, these thing are always easier said than done especially when it comes to matters of financing. But for some struck of luck, we’re born at a time where such thing as export finance already exists. Businessmen of the previous centuries would have been shaken.

    export fundingBut what is export finance to begin with? To put it simply, it involves advancing the value of export sales invoices thereby receiving cash prior to their actual maturity. Keep in mind that mot importers opt to defer payment up until they receive the goods or until they have resold them. This can be trouble for entrepreneurs because it will hamper liquidity. While these receivables are assets per se, they are not liquid. So to continue the transaction and at the same time not endanger the company’s financial standing, the method is taken into account.

    Now should you decide to use export finance now or in the future, here are a few reminders to take note of.

    Identify needs. Business entities come with a unique set of needs because no two are exactly alike. It is important to identify what yours are, why and t what extent. This makes it easier to pinpoint how much resources will ne needed, what type of financing shall be taken and which receivables shall be subjected to the service.

    Know your options. Export funding comes in several variations and types which cater to varying needs. Learn about each of them: their pros, cons, costs and impact to the company. This should help in deciding which is a better fit when.

    Use a budget. When resources have been acquired, make sure that they are allocated as efficiently and effectively as possible. This is where budgets and financial plans come in handy. Not only does it help us identify our needs and sources but it shall also allow us to better manage and track our expenses.

    Be prudent. – When using your export funding, practice prudence. In business and accounting, this is where we expect and gear for the worst to avoid overstating the bemefits and underestimating the threats. This should prevent the likelihood of shortages in funds and overshooting of sales forecasts.

     

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