While the dollar is not as weak as it was earlier this summer, The Wall Street Journal (subscription required) reports that many businesses are still looking to exports to fuel growth to offset economic weaknesses in domestic markets.A few companies have approached me as of late with cash flow challenges resulting from working capital tied up in international accounts receivable.
While there are sources of accounts receivable financing that will provide funding tied to international accounts receivables, those lenders typically want the exporters to have at least a few months of experience at selling overseas with open credit terms. As always, those customers should be creditworthy.
As I've written in the past, if you're extending credit terms to your customers, you're a lender. Take extra precautions when you're providing credit terms to foreign customers as your own funding sources may not be prepared to provide you with a loan secured by foreign accounts receivable. Or they might be willing to advance your loan, but only to the extent your customers are deemed bankworthy.
Ask your lender in advance of providing terms to your foreign clients so you don't get caught short on the working capital needed to keep the doors open.
Need help finding the right factor or telling your story the right way? Read "Matchmaking for Business Loans" and give me a call!
Tags : accounts receivable financing , exports , working capital , credit terms , international factoring
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