Today we are going to talk about export financing. Carrying out commercial operations abroad has become not only a means of survival for most companies, but also a path to international expansion. In today's article, we will tell you some information about this situation of exports in Spanish companies, what are the risks involved in these operations and how these risks can be controlled.
How are exports in Spanish companies?
In most situations, a company needs to be in continued growth so as not to see your sales stagnant and your projection for the future. In simple words, the Business success feeds on a continuous improvement. It is there where the exports they can play a very important role on the road to overcoming the business ceiling.
Spanish companies are already benefiting from the results that exports can offer their businesses. According to him Foreign Trade Monthly Report In the month of August 2018, Spanish goods exports rose by nearly 8% compared to the same period in 2017. This evolution can be clearly seen in the following graph.
Source: Monthly Foreign Trade Report (August 2018)
This graph represents the exports made from Spain in millions of euros, generally to countries that belong to the European Union. In volume terms, the exports they grew a 3% with respect to the previous year. The following graph shows the main countries to which exports have been made in the last period:
Likewise, the exporting companies indicated three major factors that favor the possibilities of realizing this type of operations abroad:
- evolution of external demand (46%)
- competition in quality (24,9%)
- Availability of human Resources suitable for export activity (21%)
As exports increase, ways to get financing they are also sophisticated. It is therefore about operations that need investment, and to assume certain risks that many companies do not have sufficient solvency to be able to do. That is why the export financing offers an option for these businesses to meet their objectives.
Exports can bring with them big benefits and new paths that lead to the expansion of a business. International trade entails a series of dangers that can be intensified when compared to domestic trade, since certain factors come into play. situational factors that cannot be avoided, but yes can be foreseen. then you We list some of the risks of international trade:
1. Exchange rates
the continua currency fluctuations They can create a risk, and not only for one of the parties to the contract, but for both. This is due to the fact that the dollar is taken as the currency of the contract, therefore it is recommended to use a Currency Forwards.
2. Failure to pay
It is one of the most common dangers today when it comes to export operations. It is possible that the importer decide not pay the exporterfor the merchandise received. To reduce the chances of this happening, it is necessary to use techniques and resources as the possibility of Prepayment, take out risk insurance export credit, etc.
3. Payment delay in time
This type of risk is related to the previous one, since it refers not to a lack of payment by the importer, but to a delay in his time. It is a danger for the exporting company since it must face the payments of the operation. To reduce it, you can use methods similar to those mentioned above. If you have any questions about it, send us an consultation and we will help you in your case.
4. Non-adaptation of the product
The culture, the legal aspects either politicians they can be a reason for the product not adapting to the foreign market as expected. Although at first it does not seem to have repercussions on the exporting company, since in principle it is only responsible for charging for these products, it does have it for a future approach to international expansion.
5. Inconveniences during transportation
Regardless of the size of the merchandise, the problems during transportation they are also very common and can have several sources. Breakdowns, paperwork delays, thefts, etc. Although it is a external factor and difficult to control, it is possible to take measures that help both parties to protect themselves from this type of inconvenience of the operation. For example, clearly define in the contract the clauses relating to the time of transportIn addition to choosing a effective and efficient transport company for work.
These are some of the main risks involved in betting on international trade for any company.
How to decide to export?
We know it's not a decision easy, for any type of business and company. That is why to make this type of decision it is convenient to have some important points to consider. The following questions may help you decide:
- What is the level of competitiveness that my company has? It is necessary to have some knowledge about what the positioning of your business at a national level. It must be made clear that an export operation is not a way out of national problems. It is a consequence of growing the business in the environment you already know.
- Do I have the necessary personnel to carry out this type of management? The management of international trade requires experienced workers and the necessary knowledge to carry out this type of operation.
- Is the company I have chosen solvent enough? It is also important to have a knowledge as close as possible to the financial stability that the importing company with which you intend to do business may have.
- Do I want to make more exports in the future? Surely it is not an isolated operation, and in the future you decide to rcarry out more operations How are you expand your business betting on more durable sales contracts.
- Do I have enough financial capacity for it? It is one of the basic questions that you should ask yourself, and in this we can help you in Alterfinance. Our objective is get you to reach your goals that you have considered without financing being a problem.
Every action in your company requires three basic steps to try reduce risks that she brings: plan, develop and control. Planning helps you anticipate any outcome and devise a strategy to help you solve any kind of problem that comes your way. This is why thefinancing of your exports It can make the difference between the success and failure of the operation.develop safely the action, knowing that you have studied even the smallest detail and that success is almost assured. And last but not least, control the consequences of that action.