Funding growth by heading overseas

As the economy continues to struggle, many businesses are looking overseas as a means of driving growth. This notion is important, one of pushing into new markets and territories to expand your customer base and potentially grow your business.

However, for some small businesses it is easier said than done. In order to push your business further afield into new territories, crucially you need two things; stability and cash flow. Obtaining a loan from the bank or a bank overdraft may seem like the ideal way to secure the second of these factors, but it doesn’t always promote stability.

Newly implemented financial products such as export factoring may provide the ideal solution.

Export factoring

Export factoring at Bibby Financial Services for example offers a structured finance solution tailored for businesses looking to expand into new territories. As opposed to a business borrowing money to expand and accruing debt on top of this, export factoring is an asset based finance solution.

As soon as an invoice is issued by the business, up to 90% of the value of the invoice will be released within 24 hours of the payment being requested. The remainder will then be provided as soon as it is paid by the client minus a small admin charge. A service such as this immediately provides the cash flow for the business to meet any payment they’re required to make.

How does this help a business expand into new territories?

Export factoring provides both stability and cash flow. The key advantage is the fact that it is structured lending, with no debts incurred as all capital provided is done so against invoices already issued – debts their customers have agreed to pay. This structure also means that as the business grows, so does the available funding.

How does it work?

Say a business currently trading in the UK wants to trade abroad; factoring can provide the necessary cash flow to stabilise things at home before looking to expand into new territories. Once they start to grow into these territories and issue more invoices to customers overseas, more funds will become available through the factoring agreement. This structure is ideal for small business growth.

Are there any other benefits?

One of the key elements of a factoring service is that the funder will take control of the business’ sales ledger, chasing the customers for payment. Not only does this free up valuable time to concentrate on the day to day running of the operation, when it comes to export factoring they can also rely on multi-lingual credit controllers to remove any possible language barriers. In addition to this there is also the potential for bad debt protection and credit checks run on existing and potential clients.

To move into new territories; export factoring could lead the way.

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