Aug
05
2019

Finance Solutions For Companies Venturing In The Import Industry

Importing pertains to the process of bringing in goods or services from another country. They come from foreign countries and are usually brought in for resale. Many companies find this type of business quite attractive since the products or services from other countries are really affordable and they can be resold for a nice profit margin.

Although the process of importing and reselling goods seems like a simple concept, entrepreneurs who are considering starting this kind of business will have to overcome various hurdles. One of these is finding the right financing solution.

At present, there are various finance solutions or methods you can choose from. The most recommended one by finance experts are:

Factoring in accounts receivables.

Also known as asset-based loans, this method involves selling your credit accounts or accounts receivable to a bank, lending company, or other financing institution. Accounts receivables are usually sold at a discount, between 80-90% of the face value of your credit accounts. An advance payment will be given to you by the factoring company, about of 2-3%, for the accounts you would normally have to wait on for payment.

Purchase order financing.

This method has similarities with asset-based loans. The main difference with this financing solution is that you take your invoices or purchase orders and assign or sell them to a financing company. This company will then assume the risk and the task of billing and collecting. When the goods are produced, the financing company collects the payment from the customers, takes its cut of the proceeds, and pays you the profit. This option is highly recommended if your profit margin is high enough on the goods you are importing. Having a good and reliable supply chain and creditworthy customers are important factors to consider as well.

Inventory financing.

Although inventory financing is an expensive solution, it is still a highly effective way of financing an importing business. Under this method, you will have to use your present inventory to secure a loan that will permit you to buy the imported goods your customers want or need. Because of this, you can effectively increase your inventory without impacting your cash flow. However, with this option, it is crucial to make sure that you can service or repay your debt. Inventory financing comes in three types: blanket inventory lien, floor planning, and field warehousing. Choose the type that best meets your requirements.

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Jul
29
2019

Explore Asset And Sales Finance Solutions With Your Bank

If you’re starting up a business, it can be hard to grasp the terminology you need in order to speak to your bank about funds; when it comes to discussing asset and sales finance, for instance, things can get tricky. It is, firstly, important to know what asset and sales finance is: a service through which banks help businesses obtain a range of equipment, including plant and machinery, commercial vehicles, IT equipment, office furniture and cars. Essentially, sales financing will help you get quick access to cash, while asset financing will help fund business equipment.

Many banks offer several cost-effective and expedient sales financing solutions; and with such solutions, businesses can find enough working capital to be able to operate. Two sales financing solutions are factoring and invoice discounting. With factoring (recourse and non-recourse),up to 95% of the value of approved invoices can be advanced within a given period of time with the balance being paid on receipt. And while invoice discounting (also recourse and non-recourse) functions in a similar way, there is a crucial difference between the two: in factoring, the client’s customers are made aware of the bank’s involvement with the business; in invoice discounting they are not.

Another method of sales financing used by many banks is stock finance; this allows you to release as much as 60% of the funds tied up in eligible stock through a completely flexible system. This will release finance that is usually not available for working capital needs.

Asset financing solutions will help you gain assets in an economical way, without eating into your cash reserves. As with sales financing, banks will often offer a range of asset finance solutions to its business customers. Hire Purchase, for example, can help you acquire the asset you need right away, but payments can be spread across the life of the asset in question. This may also allow you to keep the asset at the end of your term for a particular fee. Operating Lease asset finance will allow you to benefit from a particular asset, while the bank itself takes on the risk of losing its value; the rental and return conditions for the asset are fixed at the outset.

Many banks will offer a variety of asset finance products that cover the needs of a wide range of businesses, be they technological or agricultural. Barclays Asset and Sales Finance [http://www.business.barclays.co.uk/BRC1/jsp/brccontrol?site=bbb&task=channelFWgroup&value=7148], for instance, offer a Technology Lease asset finance product to help finance your technology needs, as well as an Agricultural Lease, which offers finance to buy machinery, vehicles and land, as well as many other benefits. So if you’re planning to start up a business, or you run an established business in need of asset and sales financing products, check out your bank’s asset and sales financing solutions to see what difference they can make.

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