If you are an entrepreneur of a small, medium or large company and you have the profile of an exporter, you will surely be interested in opening a space in new markets in other countries and maintaining a portfolio of regular customers. For this, it is essential that you know which are the ways more effective to minimize the risk of possible losses and at the same time speed up and manage your collections. We will tell you how it works export factoring and the reasons why it will be your best option.
To begin with, it is important to know what the factoring. It is a contract that companies use to advance a collection mechanism that assigns the credits derived from their activity to another that will be in charge of managing those collections.
Is called factoring, because the financial entity that acquires the credit rights is called a "factor" and is the one that will pay the company that has assigned the collection rights and will be in charge of collecting from the clients on the expiration date of the commercial credit.
What is export factoring?
He export factoring It is an operational framework that is based on the assignment of commercial credits that an exporter holds against its clients in other countries, in favor of a financial entity or factoring companies.
In it export factoring, the exporter assigns the collection rights of the invoices issued for its sales on credit in foreign trade operations, in exchange for an advance of the amount that has been a previously agreed percentage and from which commissions for contracted services and applied interest will be deducted. for this advance.
Once the entity or financial institution has classified the clients or debtors and after analyzing potential clients in international markets, the exporter must notify them of the assignment of their commercial credits and request that the payments of their invoices be directed to the new creditor that in this case is the factoring company.
International export factoring It is a widespread mechanism with a long tradition that projects the best image of the exporter without any negative connotation or that could generate distrust in the client. It is a consolidated and proven service in the countries with the longest export tradition.
In this international factoring in which these exchanges of commercial credits are facilitated and regulated, there is an international association of factoring entities that, through a communication system, request debtor classifications, quote operations, assume commercial risks and, above all, Copper efforts are analyzed in more than 70 countries around the world.
Benefits of export factoring
He export factoring either international export factoring, is an optimal way of financing working capital because it allows the company to obtain the liquidity it seeks in international sales operations immediately.
He factoring Maximizes cash flows due to payment agreements with customers or debtors, which helps the company generate greater liquidity for early collections and thus cover debts associated with the invoices that are assigned.
There are five main benefits of export factoring:
1.- It is a means of financing alternative to other forms of indebtedness, such as long-term bank loans, or short-term bridging loans that cover cash needs.
2.- Exporting companies or SMEs improve their ratios or indicators that allow knowing the situation of a company compared to others and help to improve their balance structure by contracting the export factoring.
3.- The factoring companies that provide this service assume the risk related to the collection of letters and promissory notes of the company and will demand the payment of interest, however, the associated interest rates are always fixed.
4.- The international factoring It mainly benefits companies that are in the growth phase, because it handles firm and repetitive exports aimed at foreign buyers who are regular customers.
5.- The export factoring It is not only a means of financing, it also offers services such as commercial investigation of importing companies, potential clients and analyzes the collection management of commercial credits for sales abroad, in addition to managing the accounting of foreign sales and collection accounts.
Export factoring with Alterfinance
If after knowing the most relevant concepts about the export factoring If you wonder what financial institution can provide these services in a professional manner, the answer is Alterfinance.
Alterfinance is the financial institution that will manage your capital without obstacles or blockages. If you have a company whose scope goes beyond the national territory and you need quality advice for financing exports, Alterfinance will become your best ally to collect your export invoices in advance, due to its extensive experience in financing for companies and management of charges.
check with us about him export factoring or financial management tools, as well as services and solutions for investors, freelancers and for small, medium and large companies.