Factoring for Importers and Exporters
Import financing happens in two phases. The first phrase involves getting your product shipped to the United States. Exporters in other countries want to be paid for their product. Importers in the U.S. want to be sure that they receive what they have paid for. This conundrum creates a need for an international finance solution.
To address this problem, a Letter of Credit is a common solution. A Letter of Credit assures payment to the supplier once the product is received in the U.S. and verified accurate. How does it work?
An international finance company draws up the Letter of Credit between a bank in the U.S. and a bank in the country of product origin, both dealing in international finance. The Letter of Credit assures that the U.S. bank will release funds to the foreign bank once the product is received in the United States and verified accurate. With this arrangement, both parties are assured that both payment and product will be received.
The second phrase of this import financing process involves a Factor. Once the bank releases the funds to pay for your product, they want their money back. Therefore, a Factor has to be involved. Once your product is shipped to your customers, accepted, and an invoice is created, then a Factor can purchase and advance payment on that invoice. They will first pay off the finance company that provided the Letter of Credit and send the remaining amount of the advance to you. Once your customers pay their invoices, then the Factor will send you the rest of your payment minus their small financing fee.
This may all sound difficult, but these finance companies know exactly how to handle import financing while protecting your interest. The hard part is on your part; finding a product supplier and customers to purchase them. Assured Capital Funding, LLC is connected to financial institutions competent in handling these technical matters. Contact us to make it happen for you or to discuss your situation.
Export factoring is very similar to domestic factoring. A product is shipped to a foreign country, a Factor buys that invoice and sends you an advance. The Factor waits to be paid by the foreign company and then sends you the rest of your money minus their fee.
Of course, shipping product to another country causes a little concern about who you are dealing with. An excellent Export factor will help with verifying the credibility of the company you are interested in doing business with.
Our program: Assured Capital Funding, LLC is connected with offices in 13 countries. Our program is a non-recourse factoring program. It includes guaranteed credit of your customer and credit insurance to insure payment on your account. Having credit guaranteed relieves some of the stress you may have selling to foreign companies. In addition, it includes collecting payment of invoices. So, instead of worrying about collections, you can focus your efforts on sales. Your advance is paid as soon as your product is ready to leave port. Receiving payment this early allows you to pay your suppliers early, creating a good reputation with them.
Do you also have accounts in the United States? Those invoices will also be covered by the factoring arrangement.
To get the above export factoring support, you need to be doing at least $2,ooo,ooo a year in sales and growing. To discuss solving your international sales financing, contact us to discuss your situation. We have the knowledge and support to help.