Export Financing is a methodology used when a commercial entity intends to purchase goods or services from another country. This type of financing not only makes the exporting of goods and services possible, but also it often plays a major role in the actual close of the sale.
At issue is the key difference in priorities between exporters and importers: Exporters want to be paid as quickly as possible while importers typically prefer to defer payment until the shipment has been received or even re-sold. With competition intensifying in export markets around the globe, bridging this gap in priorities between importers and exporters is a paramount concern when trying to establish a foothold in new markets or when fending off competitors in existing ones.
Here are a few factors to examine when considering export financing:
- Will financing play a role in making the sale? This comes down to being able to offer the best terms possible. This is especially important with commodity products, as advantageous terms can make a huge difference in profitability.
- The timeline for financing – Financing that pays an exporter faster than a competitor can determine whether a sale is made or not.
- Financing costs – This is another critical aspect in the profitability of the deal.
- Transaction risks – These can include political upheaval, economic stability, local conditions, etc.
- The necessity of pre-export financing – This can occur with larger orders or when an exporter’s working capital has ebbed. Here too, export financing can win a sale that might otherwise be lost.
With extensive knowledge of export markets, credit agencies, foreign financial institutions and more, Dmitrij Harder and Solvo Group can deliver advantageous financing terms that can get deals done.