Export Factoring Overview, Benefits and Quotes

Export Factoring, the financial alternative to expensive business overdrafts and bank loans, can be used not only in the UK but also in most countries around the globe.

A Factoring company will offer to release up to 90% of the funds billed in a customer invoice, often within 24 hours. Some offering in addition to take over the chasing of unpaid customer invoices, thus helping businesses to even out their cashflow and allowing them to pay their own suppliers without any hindrance.

Factoring is fast becoming a valid financial solution for businesses in the UK who find themselves in financial difficulty and need to be able to access additional business funding. Unfortunately, many are now finding that banks and other lenders have revised their lending criteria, which rules many smaller and younger businesses out, through simply failing to meet with more stringent credit checks and financial reporting. In addition, interest rates and penalties are considered to be excessive, in many instances not helping businesses to find their feet but actually exacerbating the situation. Finally, banks are able at any time to recall their overdraft or loan facility in full, at short notice, putting many businesses under immense pressure. Factoring, on the other hand, looks not at your credit history but that of your customers and the only assets you need are unpaid customer invoices.

Of course, not all trade takes place within the UK, with businesses of all sizes exporting their products and services around the world. This causes few problems, although the business owner should take care to examine in detail how much money can be raised, with regards to current currency conversion rates.

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Preventing potential issues with Export Factoring

Many Export Factoring companies will work with a carefully selected partner in the country to which you export, who will in turn become responsible for collecting payments within that country. This prevents any problems arising due to language difficulties, law or culture.

The only issue then is ensuring that the payments you receive from that country are to your advantage. If the country or countries to which you export are based in the EU, you may Factor debts from customers based within that country, regardless of the amount you sell or the outstanding amount on the invoices. However, outside the EU, you must have a basic level of sales within that country, usually £500,000. In addition, your Factoring company may well charge you a higher sum for collection.

One other point to take on board is whether or not to allow your customer to pay your invoice in their own currency or yours, should they ask. In order to evaluate this, you must look at the current exchange rate to calculate how much you will receive in each instance.

There are steps you can take, however, to protect yourself against several of the problems associated with export, including purchasing credit protection, to minimise the threat of bad debt and taking out insurance against currency fluctuations.

Touch Financial

The UK’s leading online commercial finance broker, Touch Financial is an expert in the field of both domestic and Export Factoring. With over 25 years combined experience, our confidential financial solution service has helped thousands of businesses overcome the problem of bad debts and smoothed out their cashflow.

  • Annual turnover of at least £50,000
  • Non-EU export sales figures of at least £500,000 per annum (no minimum EU sales)
  • Credit terms of between 30 and 90 days

If your business fulfils the criteria above and you are interested in discussing Export Factoring or any other financial solution, then give us a call on 0845 388 9725 or compare quotes instantly online. We will deal with your enquiry quickly, and our free initial consultation offer means you get the best advice, with the minimum of inconvenience.

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