The Advantages Of Financing Of International Trade

by | Sep 4, 2017 | Financial Services

Domestic markets are important for many businesses, but with the option to sell internationally into new markets, small to mid-sized businesses have the opportunity to tap into areas of the world where demand for their products is high, and competition for that market sector may be very low or currently non-existent.

Taking the leap to begin selling internationally can be a challenge for a small to mid-sized business without a significant cushion of working capital in the bank. The delays in payment, the large shipments and the potential risks of selling internationally can make it difficult to find traditional types of lenders that will provide financing for these ventures.

The answer to these issues is to turn to specialized companies that offer financing of international trade. These companies work closely with the Export-Import (Ex-Im) Bank of the United States to be able to provide working capital and factoring services to companies selling into these international markets.

Extending Terms

In addition to providing factoring services, by using a company offering financing of international trade, it is possible for the US-based business to offer extended terms for the sale to the international buyer. This is often a key factor in making international sales, particularly until there is a market demand at the buyer’s location.

By reducing the pressure on the buyer to make a payment immediately after receiving the shipment, US-based companies can offer better terms in new or existing markets.

Purchase of Raw Materials

By utilizing pre-export financing through companies working with Ex-Im bank to offer financing of international trade, US-based companies can also take advantage of raw material bulk purchases and discounts for early payment from their suppliers.

This, in turn, helps to boost profits for the US-based company by cutting production and material costs. Not only is this good for the company’s bottom line, but it also allows for continued growth of the company and access to new markets.

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