Invoice Finance for an Exporter – Cash Flow and Peace of Mind

Back to News

If you are an exporter of goods or you are considering exporting to other countries invoice finance can be a fantastic cash flow solution that not only provides working capital but also peace of mind.

The Risks

By selling to other countries you are targeting a much larger market and the potential for growth is much higher. However, to compete with other suppliers around the globe you may need to offer credit terms. This can cause cash flow issues but can also increase the risk of non-payment. How can you be sure that your new customers are credit worthy and what if they don’t pay on time? These questions can cause sleepless nights especially when your own suppliers and employees need paying.

How does invoice finance help?

By using export invoice finance you can smooth your cash flow and reduce the risk of non-payment. Invoice finance releases up to 90% of the cash tied up in your unpaid invoices. This means that you can access cash to pay wages and suppliers without worrying about when your customer will pay. The invoice finance company will also credit check your customer to ensure that they are credit worthy. This gives you peace of mind that they have the ability to pay you for your goods or services.

Reduce the risk of bad debts

Additional peace of mind can be gained from using a non-recourse invoice finance facility that includes bad debt protection or credit insurance. This means that each customer will be given a credit limit and as long as you trade within these credit limits your risk of bad debts is drastically reduced.

Case Study – Exporter Of Steel Hand Rails

Funding Solutions UK have a client that manufactured specialist stainless steel tubing that was sold to interior designers to be used as hand rails, etc.. The tubing was highly polished and oval and was popular in modern expensively furnished buildings.

Opportunity

They had the opportunity to supply a builder of ‘super yachts’ in Italy who used this material on board yachts that they were selling to the world billionaires. This was a fantastic opportunity to export to another country and break into a new market. However, our client had concerns about the impact the lengthy payment terms would have on cash flow and also about the possibility of chasing debts in a foreign country and a foreign language if payment was not made.

Solution

Funding Solutions UK sourced an invoice finance facility that would accommodate these exports by providing an 85% prepayment against the invoices the day after they were issued. This solved the
potential cash flow issues caused by the lengthy credit terms requested. We also sourced a credit insurance policy to eliminate the risk of bad debt.

Funding Solutions UK

Funding Solutions UK are specialist advisors to importers and exporters who are looking for suitable working capital or cash flow solutions. We have years of experience and our advice in independent and impartial.