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Export finance – what is it, how does it work and how can it help your business? 

Business News

Choosing to export your products or services is a great way to expand your market and increase business sales and profits. Operating in overseas markets can lead to greater economies of scale and better margins. 

Businesses who choose to export can however face new challenges. High upfront costs, increased shipping times and long payment terms can put significant pressure on your business cashflow. 

Businesses who trade overseas frequently offer deferred payment terms, often up to 120 days post shipping. This can lead to businesses experiencing a cashflow gap between shipping the goods and receiving payment. 

Export finance offers a solution to smooth the peaks and troughs of cashflow and can help you to better manage your relationships with your overseas customers. 

Director of business finance at Pilot Fish, Ewan Clarke emphasises the significance of export finance in stabilising cash flow and ensuring peace of mind for exporters,

‘Often export businesses can be waiting weeks to receive payment as products take time to ship. Export finance helps to bridge the gap between raising an invoice and receiving payment from your customers. With facilities delivering up to 85% of the invoice value, they are a great way of providing cashflow stability and peace of mind.’

Exporters can expect to receive payment within 24-48 hours of submitting an invoice. Some facilities will transfer funds on point of shipping, rather than point of delivery, allowing you to address your working capital needs sooner. 

Ewan shares how one client was protected during major international shipping delays: 

‘Our client in the sustainable microencapsulates industry had sent an international shipment. Delays in the Red Sea added five weeks to the delivery time. Fortunately, the client’s export facility transferred 85% of the invoice value on shipping, protecting the client from a large, delayed payment. With their working capital protected, the business was able to continue daily operations.’ 

What are the benefits of an export finance facility? 

  • Businesses get immediate access to finance that would otherwise be inaccessible for up to 120 days.
  • They can use the working capital to invest in other areas of the company and its growth.
  • They protect working capital and avoid late payment charges for your own bills.
  • Facilities can grow as your business grows 
  • Export finance is ideal for SMEs that need funds but have limited banking facilities.
  • Chasing late payments can be outsourced to the lender. 

Export facilities come with a pre-agreed service fee. This is deducted from the invoice value, meaning the borrower isn’t locked into a long-term repayment plan. Furthermore, export finance facilities often offer additional support services such as confidential multilingual credit control. This means debts are collected by professionals fluent in the debtor’s language, enhancing communication and reducing the likelihood of disputes or payment delays.

In conclusion, export finance offers a lifeline to businesses navigating the complexities of international trade. By accelerating funding against shipping documents and providing protection against payment risks, it empowers exporters to seize global opportunities, manage cash flow effectively, and sustain growth in the competitive global market.

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Pilot Fish Broker Limited, Allia Future Business Centre, London Road, Peterborough, PE2 8AN

Pilot Fish is the trading name of Pilot Fish Broker Limited.
Registered in England and Wales. No. 956 09 50

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