International Trade

Bigger Advances In 'Smaller' World

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...to act on behalf of the client for overseas collections. This is done by approaching debtors in their own country, in their own language and in the locally accepted manner. As a result, distances and cultural differences become less of a barrier.

Also, if a credit protection policy is taken out, the factoring company will also guarantee payment to pre-agreed limits should an invoice remain unpaid at 90 days after the invoice due date, provided it has not been disputed.

For international factoring to be truly effective, however, the international factor must have a genuine international presence, preferably through its own network such as the one we operate within the FCF Group or via one of the international factoring groups such as FCI.

It is also essential that they have experience of providing such facilities as well as having access to overseas legal representation that can be quickly implemented to pursue payment through legal processes, should the need arise.

It is also vital that the terms of funding to be provided against exports are made very clear. For example, are there any restrictions on the advance rate against export sales, or, limitations to the percentage of your overall sales ledger that export sales can represent?

In addition, businesses should consider negotiating a suitable cash management and foreign exchange facility with a bank able to meet the needs of the company on a local, national and international scale – and one that will work alongside the international factoring service. Also, by opening bank accounts in the location of your debtors prompt payment will be much more likely.

International factoring is a proven and highly effective tool for SMEs looking to enhance their cashflow at the same time as mitigating their risk of late or non-payment. And, as the statistics show, there... continued on page four >

 

 

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