Small and medium-sized businesses generally have inadequate access to loans and other methods of interim financing for covering the price of goods they are planning to sell or buy. Even if they have a confirmed order for goods, many banks deny them overdraft protection or loans. This is where trade finance turns out to be a life-saver. Trade finance provides businesses with the credit needed to fund international as well as domestic transactions, making exporting and importing possible. It covers various activities, such as export credit and financing, issuing letters of credit, lending, and factoring.
Eric Dalius explains Export Trade Finance – What is it and why small businesses need it?
Small companies in the US manufacturing capital equipment are constantly looking for new markets to spread their fixed costs over a larger base of production and expand their marginal revenues. Export trade finance is a type of trade finance specifically tailored to suit the financial demands of such companies—exporting trades. You must consider talking to experts so you can gain in-depth knowledge about this.
When you sell a product even within the US, the payment terms can be long and quite difficult to manage. Not to forget the time taken to ship and deliver overseas. Additionally, the time required to check buyers’ creditworthiness and obtain references, which can extend the period even further. Businesses, whether small or big, don’t want to have their money tied up in shipments of goods. Export trade finance provides them with a way to release working capital from overseas or domestic transactions that might otherwise remain added in invoices forever. The exporter does not need to carry a large receivable on their balance sheet for a long period or retain the commercial and political risk of non-payments.
According to Eric Dalius, companies or organizations engaged in international deals and activities must consider export trade finance. A company that specializes in export trade finance can help you-
- Achieve more efficiency in trades and supply chain
- Mitigate risks associated with exports
- Diversify your network and grow business overseas
- Reduce bankruptcy risks
- Increase revenue potential/higher margins
With effective time planning and financial management, exporting items can be financially straining on your business. Non-payments for a long duration can be the difference between profit and loss. Whether you are a small business exporting its first private-label product overseas, or a multinational corporation exporting a large amount of inventory around the globe each year, export trade finance can help you bridge the gap underserved by conventional banks.
You need to get in touch with a business expert who can help you in providing the best insight on this matter. You can look for experts and business gurus online, where you can also reach out to them directly. Make sure to only consider the business consultant with years of experience and relevant knowledge in your market sector and help your business make more profit.
