It is estimated that over 80% of world trade is conducted on open account terms.
As such, sellers may require financing for all or part of their needs.
- Settlement by means of factoring can be defined and included within the buyer/seller contract.
- Financing can be arranged at any time during the lifetime of a transaction.
What criteria may lead to an exporter considering factoring?
- Pressure on cash flow due to increased demand for products.
- Delays in receiving the settlement of invoices, despite often offering 30 or 60-day payment terms to buyers.
- Instead of securing a bank loan for a fixed amount, factoring has no limits and factoring is not a loan.
- The seller may be relatively new to exporting and, therefore, has no prior credit or performance history. However, clients of the company may have long payment histories and good credit scores.
- Limited resources are available to monitor and chase for payment of invoices.
- Use the information available from the factor to assess and search for new clients.
For further information, you can email us on info@londontradecapital.com
4 replies on “Reasons for Invoice Finance / Factoring”
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