Advantages in Export Financing as Revealed by Dmitrij Harder

The availability of an export financing facility can provide competitive advantages for both importers and exporters that can deliver benefits while increasing opportunities and the potential for building new business. Additionally, having a bank or other third party handle and finance the transaction can reduce both risk and responsibility for both importers and exporters.

Advantages for exporters include:

  • The ability to gain a competitive edge over other exporters by being able to offer financing to potential customers – Buyers (importers) will often seek financing for goods due to the fact that revenues generated by a shipment may not materialize for weeks or even months.
  • Exporters receive full payment for goods sold coinciding with either shipment or commissioning – Without a financing facility available, buyers will often negotiate for terms where partial payments are made over time. Financing delivers full payment up front, meaning that sales proceeds can be allocated to operations, buying more inventory, etc.
  • Upfront payments in full negate the possibility that the exporter will ever have to go after the customer to collect on unpaid debt – Accounts going into collections are always costly, none more so than when collections are taking place in a different country.
  • Full payment on shipment or commissioning eliminates risks on currency exchange and interest rates – Payments that extend over time can vacillate in value due to gyrations in currencies and interest rates, risks which are eliminated with full payment before goods leave the dock.

Advantages for importers:

  • Long term export financing terms allow for payments to coincide closer to the revenues generated by the imported goods – This allows for cash flow from the imports to cover some or all of the payments due on the loan.
  • Having an export financing facility in place avoids the need for local financing – Depending on the point of origin, local financing can be far more expensive and stringent than loans prepared in advance of a transaction.
  • Importers with an available credit facility have negotiating leverage over competitors trying to buy on terms – This is a substantial advantage, as exporters strongly prefer full payment up front to terms that can extend over several months.

These are just a few of the advantages generated by export financing facilities. As structured by the experienced team of professionals led by Dmitrij Harder at Solvo Group, these facilities can increase competitiveness, reduce risk, and smooth out cash flows.

 

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