Export Invoice Discounting
If, as an exporter you are facing a cash crunch in your business, which in turn does not allow you to process new export orders and you are unable to secure additional funds from your bank because they are demanding collateral or organized financial statements, Oryour buyers can’t be persuaded to pay in advance and you have to offer flexible payment terms to keep them convinced, then your business will benefit from Trade Finance.
| Export Discounting | Export finance helps exporters to offer credit to their buyers. This means that they can offer “ship now, pay later” terms to buyers – and this is what buyers want. Export finance is provided by a lender: 1) Lender pays you – the exporter, in cash when you ship the goods. 2) The buyer, somewhere else in the world, pays the Lender later. 3) Lender takes the buyer credit risk and you do not have to wait for the money |
| Key features of Export Invoice Discounting | Payment term: Negotiate how much time your buyer wants before he should pay for the goods that you ship him. Buyers like to be offered the chance to receive the goods and then to pay later. This shows the exporter has confidence in his products and allows the buyer, time to sell the goods, which helps his cash flow. Price: Rate of Interest varies from 6% to 11% pa |
| Collateral | There is no requirement for any collateral. All that is needed is to assign the Invoice in favor of the Lender discounting your Invoice. |
| Benefits of Export Invoice Discounting | You will be able to raise finance without having to put up any collateral. In the event the buyer defaults on payment, you are not liable. You will be in a position to increase your sales as you will be selling on open credit or D/A terms. There will be no need to ask your buyer to pay in advance or to open an LC. You will get money upfront – your cash flow will improve. |
| Non-Recourse Export Discounting | Non-recourse export financing provides you with immediate cash against the invoices that you raise on your international buyers. You do not have to bear the risk of buyer default. When you raise an invoice on your overseas customer, the advance up to 80% of its value to you would be disbursed within 24 hours of submission of the relevant documents |
