Dmitrij Harder Discusses General Considerations when Structuring an Export Financing Facility

Setting up an export financing facility provides flexibility, an edge over competitors, and other advantages that can increase sales and profitability. Here are several of the main considerations when structuring an export financing facility.

  • Having available financing can be the difference between getting the sale and seeing it go to a competitor – This is especially true with commoditized goods where the only distinguishing factors between one vendor and another is pricing and terms. An available credit facility can make an exporter more competitive on both.
  • An exporter can tap a credit facility for a variety of uses including marketing costs, inventory building, shipping expenses and more.
  • Financing costs are directly correlated to financing terms – The length of terms, size of transaction, and financial strength (or weakness) of the borrower can have a drastic effect on the total cost of financing. An export financing facility should be structured to allow for some flexibility and different financing methods so that each transaction can be customized for maximum profitability.
  • A variety of risks can influence the cost of a loan – While the creditworthiness of the borrower plays a large role, there are other substantial risks to consider as well including the current and future stability of the political and economic environment of country of destination.
  • The lenders behind an export financing facility will demand that the exporter can execute orders – Lenders will assess timely execution of orders, whether shipments sent and received on schedule, and that the shipped products meet the expectations of the buyers and end users.
  • The size of a transaction can kill a deal if proper preparations are not made in advance – Getting a substantial order can be great news as long as an exporter can scale up operations to meet the demand. With a credit facility in place, the expansion of operations can be done quickly so as not to delay a large order to the point where the sale is lost.

Putting an export financing facility in place can take an exporter’s business to the next level by enhancing its competitive position. Facilities structured by Dmitrij Harder and the team at Solvo Group can also increase revenues and profits with solutions customized to the needs of exporters ranging in size from large to small.     

 

 

 

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