One of the most lucrative trades you can enter is still the import-export industry. However, entering the import industry remains risky.
Finding the best export and import financing options is one of the first things you need to do if you still want to work in the foreign trade industry. You will be able to get access to the working capital that your business needs and improve your cash flow with these solutions because you can be sure that all relevant issues are effectively resolved with suppliers and that payments from buyers are received promptly.
There are a variety of import financing options available today. They can be used independently by businesses or in conjunction with two or three others. The following are three of the most widely used choices:
1. Financing for accounts receivable. The sale or pledge of your company’s account receivable at a discount to a bank, financial institution, or accounts receivable financing company that may accept a loss risk is the subject of this option. In exchange for a fee or interest that will be paid to the commercial finance company, you will receive a portion of your receivables in advance of payment from your customers, typically between 80 and 90 percent of their face value. The appropriate fees are deducted from the customer’s payment to the commercial finance company, and the remainder is returned to you.
2. Financing for purchase orders The assignment of purchase orders to a third party—a bank, financial institution, or commercial finance company—takes care of all customer billing and collection obligations under this import financing option. To maintain and enhance your company’s cash flow, purchase order financing can be utilized to finance all current and future orders.
3. Financing for inventory. A loan that is secured by your company’s inventory is referred to as inventory financing. With this financial solution, import companies can hold more stock without having to worry about their cash flow and increase sales. The majority of the time, inventory finance is included in a commercial finance package along with accounts receivable and purchase order financing.
Your company may be able to significantly expand its purchasing capabilities thanks to the three different import financing solutions mentioned above. You can accept more orders and see exponential growth with these options.
The import financial solutions you require can also be tailored to the particular requirements of your business by selecting the appropriate bank or financial institution.
Find out more about the various options for financing imports here.
