An export factoring program will enable exporters to offer and trade with their cross-border clients on unsecured open account terms, which addresses their working capital financing needs – to avoid using bank lines for L/C issuance and the related cost, or to use trade credit as an additional off-balance sheet source of finance, etc.
Open Account Terms is a powerful export-selling tool to boost your export sales
To be competitive in the export market you need to offer and trade with your clients on unsecured open account terms.
The need for open account terms
In our rapidly globalizing world, exporting has assumed new levels of competitiveness.
The market has become client-driven and clients now insist on payment terms that suit them.
Exporters have to offer more liberal terms in order to remain competitive, especially in key developed markets. Open account trading terms are now preferred by importers in those markets, and exporters must comply or risk losing lucrative markets.
WHY DO IMPORTERS REQUEST OPEN ACCOUNT TERMS?
There are so many advantages to the clients to request Open Account Terms!
- Clients can buy goods without incurring the delays, complications and cost of opening Letters of Credit.
- Clients can take advantage of the exporter’s credit terms, and reduce the need for finance.
- Since the need for finance is reduced, the cost of financing is also reduced.
- Clients increase purchasing power within existing bank credit lines.
- Clients can use immediately purchased items without waiting for payment.
HOW WILL OPEN ACCOUNT TERMS BOOST YOUR EXPORT SALES?
- Address your clients needs and requirements
- Relieve your clients from the bureaucratic process of letters of credit
- Provide your cross-border clients with cash strain relief when doing business with you
- Establish a competitive edge even outside your home base
- Increase sales with existing clients
- Open new markets & win new clients you could not get with LC payment terms.
But trading on open account terms means more risks, more cash requirements, and more credit management expertise
WHAT ARE THE REQUIREMENTS TO OFFER UNSECURED OPEN ACCOUNT TERMS?
To be able to offer safely open account terms to cross-border clients, exporters need to manage the credit efficiently in an international environment.
This means being able
- To obtain accurate and timely information on importers
- To assess realistic credit lines on importers
- To minimize losses from bad debts
- To manage the credit efficiently in an international environment
- To control the credit granted to importers by effective collections
- To maintain an up to date and efficient sales ledger administration system including dunning procedures
- To make available sufficient finance to cover the increase in working capital requirement generated by the growth in business and by the credit terms extended to importers
Export factoring programs: the powerful and safe means to offer and trade with your cross-border clients on open account terms
An export factoring program provides a comprehensive suite of essential export credit services to address the all array of credit requirements when trading on unsecured open account terms.
1. It turns your export sales into immediate cash
A company’s key to growth is the availability of cash. It provides an advantage over the competition and the ability to seize opportunities as they emerge.
An export factoring program turns your export sales into immediate cash by paying you your export sales cash. It therefore releases valuable cash rather than keeping it tied up in your sales ledger.
It provides the easiest and safest way to regulate your cash flow and plan your growth strategies.
- Secure financing that grows with your sales
- Optimize your working capital
- Seize opportunities as they emerge
2. It relieves you from unpaid invoices and bad debts risks, and secures your most valuable asset: your receivables
Bad debts hurt your business, reduce your profit margin and stunt your growth. In some situations, bad debts could put you out of business.
An export factoring program relieves you from the unpleasant effects of unpaid invoices and bad debts to secure your receivables.
- Rid yourself of bad debts
- Better plan your cash flow
- Secure your profits and your company’s assets