One of the key concerns for owners of the import export industry is bridging the long gap between the time they pay for goods to ship overseas and the time when they receive payment from their customers. Whether your company is a small startup or a large corporation that has been in the business for generations, waiting months for customers to pay for goods can bring on a cash flow crunch.
This is where a factoring company comes in. When people who are importing or exporting goods sell their invoices to a factoring company, right away they receive advance payment on the bulk of that order. After the customers pay their invoices in full, the importer/exporter receives the balance of the amount, minus a small factoring fee.
Import/export companies will be able to keep their cash flow consistent and pay their fixed expenses, but they will also be able to grow their businesses by taking on larger shipments or customers with long payment terms. In addition, because the factoring company looks at the creditworthiness of their customers, they can receive this cash infusion without having a strong credit history, putting up large amounts of collateral, or incurring additional debt.
Factoring Tips for Import Export Industry
Look for a factoring company with specific experience in working with other importers and exporters. Your industry has its unique cash flow challenges and you want to partner with someone who understands your financial needs and business model.