For companies that focus solely on the domestic market, they can miss out on the various opportunities offered by the international market. If you make a foray into the international market, you can increase your profits and protect your business against the negative effects of slower growth. Aside from that, this will allow you to diversify your portfolio.
One of the most crucial ingredients for success in the export business is export trade finance. Exporters want to get paid for their goods as quickly as possible. On the other hand might want to defer payment customers on foreign markets until they have received the products or perhaps sold it. To be competitive, your company must able to offer payment terms that are highly attractive to potential partners.
Important factors to consider when choosing the best financing option
the amount of time the product is financed – This is considered the most important factor to consider. Experts strongly emphasized that your choice of the financing will be greatly affected by how long you wait before receiving payment
The cost of financing options -. If there are several financing options to choose from, you need to carefully watch the interest rates for them, most especially. Please be reminded that these costs can significantly affect the price of the products along with your potential winnings
Risks -. Transactions are not created equal. There are people who are riskier than others. Experts have stressed that the riskier the business, the more you find it difficult to finance. Economic and political stability can actually aggravate or increase these risks
The amount of orders -. If you receive a lot of orders, working capital may not be sufficient to meet such increased demand.
You can actually get the help of commercial banks with an international department when it comes to dealing with the export trade finance needs of your business. These banks will provide your company with a wide range of international banking services.
After finding this kind of bank, consider scheduling a visit with the international department for you to know and be aware of the various items such as your export plan, banking facilities, services, and the applicable charges. In case your partner importer fails to pay for the transaction, your company will have the responsibility of paying for the loan. With the use of instruments such as letters of credit, as well as credit insurance, you and your chosen bank benefit greatly improving the quality of export receivables.