Factoring delivers Payment Credit to Buyers
Factoring eases Payment Risk and Capital
With all businesses, a positive cash flow is paramount. In first world countries, credit facilities can be established to offset negative business cycles through a transparent credit rating system, allowing enterprises access to overdrafts, extended credit limits, payment terms or various forms of finance from financial institutions.
The Cash Flow solution for Developing Countries is Factoring.
In developing countries, this is not necessarily the case; credit ratings are based on relationships, credibility and tangible assets. If your business is a start-up, high growth, in its infancy or has gone through a length negative sales cycle; government or financial institution may not be enthusiastic granting necessary funding.
Where does that leave companies unable to obtain traditional financing?
Only take sales orders that can be financially managed, limiting growth and opportunity? Commonly, these businesses look to relatives and friends for support, however that support can only be extended so far. The last option is to turn to private underground lenders, loaning short term cash at exorbitant interest rates to finance purchase orders and customer payment terms.
Factoring is the solution.
Is Factoring the Solution for your Business?
But there are alternatives; factoring / trade finance is available whereby the seller partners with a factoring company who acquires their receivable. When goods are exported, the seller is paid upon presentation of shipping documents to the factoring company who purchased the receivable from the seller. The buyer through pre-agreement pays the factoring company within the given payment terms to close the due receivable.
What are the benefits of using factoring;
- Buyers have access to open account payment terms from sellers of 30, 60 or 90 days, allowing the ability to maximise credit lines and improve working capital.
- Sellers can offer attractive payment terms to buyers who only accept open account payment term improving competitiveness.
- Sellers reduce cash exposure and risk of late or non-payment through guaranteed quick payment upon shipment without navigating Letters of Credit or pushing the buyer for payment.
- The factoring company assumes all responsibility for the receivable.
- Both buy and seller reduce cash flow exposure, maximising business growth potential.
IDGC Supports your Businesses Factoring Requirement
In cooperation with leading lenders, IDGC delivers cross-border finance need between emerging markets and developed countries. We are your bridge to Trade Finance, enabling the full benefit of factor finance to both buyer and seller.
We support businesses globally offering an easy solution to financing from export to customers in developed markets. Factoring gives sellers immediate access to risk-free capital upon export, and the buyer receives flexible payment terms on an open account freeing cash flow…a win-win solution for both seller and buyer.
Factoring is available to all global businesses exporting commodities to developed markets, reach out to Phil Bailey to receive an immediate benefit to your business.
Like to know more, contact PHIL BAILEY – APPAREL & TEXTILE GLOBAL SOURCING OPERATIONS LEADER
A Global Sourcing, Procurement & Supply Chain Leader with 28 years proven skill transforming complex Retail, Wholesale, Catalogue and Ecommerce sourcing, supply chains and operations for global Apparel, Textile and Consumer Products businesses that source from low cost production regions and distribute to global markets.