Wednesday, January 02, 2008

Will Exports Impact Your Cash Flow?

In the last few weeks, I have seen articles in The Los Angeles Times, The Wall Street Journal and SMB Finance addressing the anticipated growth in exports for U.S. based businesses in 2008.

With the weak dollar making U.S. goods seem relatively inexpensive, small business is taking advantage of the opportunity to sell more of its goods and services abroad. While the information is a bit dated, SMB Finance notes that the amount of loans to small business by the SBA's Office of International Trade almost doubled in 2006 compared to 2003.

While many small businesses will find a willing partner in the SBA or commercial banks, some small businesses will see their cash flow suffer from an increase in accounts receivable to foreign buyers.

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 lender who will help fund your foreign accounts receivable? Read "Matchmaking for Business Loans" and give me a call!

Tags : accounts receivable , exports , SBA , working capital , credit terms , small business

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