Financing Export Operations

When your business ships its goods, you simply provide copies of the Purchase Order, Invoice and Bill of Lading to your financier, who gives you 80 percent of the invoice value within 24 hours.

Once the goods arrive at their destination, the financier’s correspondent handles the end transaction, obtaining payment from the buyer locally before forwarding the funds on. When the deal is complete, the financier provides you with the remaining 20 percent of the invoice, less their fee.

If all goes well, the process is concluded. You collected the majority of the invoice value at shipment, and the remainder, less the financier’s fee, at the due date.

One of the great aspects of export debtor finance, however, is that it also secures you against non-payment. If a customer has become insolvent, for example, the financier’s correspondent – having pre-approved ‘credit’ for your buyer – pays what you are owed in any case, much as they would had they provided credit insurance.

Thanks to these advantages, many exporters now prefer this type of finance to the more traditional ‘letter of credit’ method which – with its fees on credit lines, its paper base and complex interactions between multiple financial parties – is seen as inefficient and costly.

Another benefit is debtor finance can be used selectively. There’s no need to deploy it across an entire ledger. If you’re shipping to a trusted buyer over a short time-frame, for example, and you believe your business has adequate cash reserves at hand, you might decide there’s no requirement to engage your financier at all.