An import financing includes the financial transactions destined to give funding for the purchase of goods in one country from the other. Exporting and importing are quite difficult transactions. With plentiful logistics involved, there is a long time between the delivery and the purchase of products, which might result in a considerable cash flow issue for small and mid-sized businesses since they need to function and cover the expenses while waiting for the products’ arrival.
It allows solving problems by allowing importers to borrow money or getting cash advances while waiting for the products to arrive. There are various ways of getting import financing. Traditional finance institutions, like credit unions and banks, offer several options, including:
- asset-backed loans
- regular loans
- business credit cards
- overdrafts
It may work for some businesses, but the reality is that conventional financing is uneasy to obtain. They are usually linked to long-term contracts and huge collaterals. But, you can choose good loan collateral from a good import finance service. Thus, small importers want to explore other prospects, like invoice manufacturing.
What is invoice manufacturing?
An invoice manufacturing is also referred to as invoice discounting and invoice trading, which is an important financing solution. Selling the account receivables gives the importers quick access to cash while waiting for the clients to pay for the goods they have received.
Importers can reinvest cash or use it to cover some other expenses and daily operations. The invoice factoring works, be thankful for the marketplaces that allow businesses to upload outstanding invoices to the system available for investors to buy through auctions. When investors make an offer and parties agree on the terms, money is made available in a few days. The whole process is finished online.
Is import finance the right solution for importers?
Any company can manage the payment cycle for imports efficiently. A loan taken by the importer or buyer from overseas lenders, such as banks and other financing institutions for financing the purchase of capital goods and services offers the following:
- Extends import repayment period
- Ensures suppliers paid on time
- Helps cash flow management according to business needs
An import finance option becomes the ultimate savior of many companies having the burden of paying for their imported goods or services. How do they deal with it? Let it to them as they make sure to read the agreement between both parties written in the contract and make negotiation for the repayment method.
