Export Factoring

Many factoring companies offer account receivables factoring services for foreign trade, this is commonly referred to as export factoring. Making use of export factoring will allow your company to draw funds from invoices raised with overseas customers, it works in a very similar way to domestic factoring.

There are some differences associated with export factoring. The fees will tend to be slightly higher but as with domestic factoring you can get better deals if you have a high turnover. A minimum annual turnover of £100,000 is normally required but this can also include domestic sales. Although export factoring is more expensive, it still works out cheaper than arranging export finance. Another difference is that the factor you deal with will usually use a factor in the export country to make payment collections. By making use of a local agent problems which could occur due to differences in law, culture or language can be easily avoided.

When dealing with foreign countries, currency issues should be addressed. When using export factoring you are able to invoice your customers in their currency and receive payment from the factor in sterling. This is a useful device but you need to be aware that currency fluctuations can have an effect on your profits. In some cases it may be prudent to take out protection against currency movements. When dealing with export factoring your factor will usually require that you take out credit protection to reduce the risks of bad debt.

Here at Strategy Corporate Finance we offer a free brokering service to put companies in touch with reliable and competitive invoice factoring firms that offer export factoring services. Contact us today on 0845 838 0936 or drop us an email and we can assist you in raising your cash flow from your international trading partners.