International factoring is an option when you want to reduce risk and increase cash flow. An international factoring service takes the heat off your business and assumes a great deal of the risks for your international business transactions.
A service for international factoring can help to manage the financial risks involved with international trade. It can be one of the easiest ways to grow your business and have the support that you need.
Invoice Factoring and More
Most freight companies, trucking concerns and other logistic companies have a good idea what invoice factoring is. International factoring can include invoice factoring services, but it is more than simply generating cash flow when you need it.
A full suite of services involved in international factoring can help to take the pressure off. Typically, businesses that are involved in international trade are asked to extend payment terms longer than they normally would for national businesses. This can put a great deal of stress on a business.
How Does International Factoring Work?
The exporter hires a factor that specializes in international factoring services (preferably a member of the International Factoring Association). The factor than guarantees the import prices of the products to the exporter.
There are four different systems that can be used in this type of transaction:
- Direct export factoring
- Direct import factoring
- Single factoring system
- Twin factoring system
The process of international factoring is just like domestic factoring, except the two parties involved are in different countries.
What Are the Benefits of Factoring for International Trade
One of the biggest benefits of using an experienced factoring company is that there is a lower financial risk. Extending credit for long periods to an importer can get costly and can be risky. These services can reduce the risk greatly.
Other benefits include, less paperwork, more information about the company you are doing business with, less custom hassles, insurance for timely inflow of cash, less problems with language differences and more.
There are clear benefits to having a team of experts on your side to help manage your international trade activities. It can be one of the smartest moves you make for the longevity and the solvency of your business.
Whether you are just entering the international market, or you have been exporting your products for years, the right factoring service has the solutions that helps to reduce risk for your business. The right team can customize factoring services to fit your business to a T!