Export Factoring

There are a large number factoring companies that offer account receivables factoring services for foreign trade, this is usually called export factoring. If you make use of an export factor it will enable your company to draw funds from invoices raised with overseas customers, the process is very similar to domestic factoring.

However there are some different aspects associated with export factoring. The fees do tend to be a little higher but as with domestic factoring you can more favourable rates if you have a high turnover. In order to begin export factoring a company usually needs a minimum annual turnover of £100,000 but this can also include domestic sales. Export factoring is more expensive than it's domestic counterpart but it still ends up working out cheaper than arranging export finance. Another difference is that the factor you deal with will, in most cases, use a factor in the export country to make the payment collections. Using a local agent eliminates problems which could arise due to differences in law, culture or language.

Whenever you are dealing with a foreign customer you should address currency exchange issues. If you are using export factoring you are often able to invoice your customers in their currency and receive payment from the factor in your own. This can be a useful part of the service but you need to be aware that currency fluctuations can effect your profit margins. It may be prudent to take out protection against currency movements in certain situations. When your business deals with an export factor they tend to require that you take out credit protection to insure against bad debt.

We offer a free brokering service to put firms in touch with reliable and competitive invoice factoring firms that offer export factoring as a service. Contact us today and we can help you raise your cash flow from your international trading partners.

IMPORTANT NOTE: We do not provide any financial advice of any nature and we only operate as introducers (not as brokers) to regulated companies and only for amounts in excess of £25,000.