Cutting the costs of exporting: £100,000 International Invoice Finance

Almost any company can start trading on the international stage simply by setting up a website. Getting an order from anywhere in the world can become routine - but finding the financial solutions to fund a large export order can be challenging.

The traditional approach with a proforma invoice, negotiating shipping costs, opening a letter of credit at your bank, customs and documentation may all seem to complications and bureaucracy. Many businesses new to exporting may give up on the whole thing because the financial side is simply too daunting.

There is also the nagging anxiety about getting paid. Dealing with nonpayment can be relatively simple with a UK customer - but it takes on a whole new dimension when the client is on the other side of the world. 

We recently helped a growing client find a solution that made exporting as simple as working with a domestic customer.

The challenge

We were approached by a company working in the display and exhibition sector. They provide sophisticated audio-visual multimedia integrated installations for museums and exhibitions and, with a growing international business, needed a financial solution that could grow with them.

“We’ve built a lead in the sector but, obviously, our market in the UK is limited. There are only so many clients who need - and can afford - our equipment. Fortunately, we know that  we can find plenty of demand for our systems from customers overseas.” 

As a leader in the UK market, the manufacturer’s services expertise and equipment have created strong interest from museum and commercial customers from around the world.

“We have had enquiries from clients in the US, the Middle East and India, among many others. These are very lucrative markets and we need to be there. But we needed to make the financial side problem-free.”

Each installation is custom-designed and built, and can cost £1million or more. Getting prompt payment for an order of that size is vital for the cash flow and, ultimately, the profitability of the company. Many exporter SMEs find that they face cash flow problems caused by late payments - goods must be funded, not just during the manufacturing phase but during a delivery period, which can take weeks. 

Issues such as shipping times and different approaches to credit in different markets can create long delays between the despatch of an order and payment being made. This can create a major financial hole that an exporting company needs to find a way to fill.

There is also the concern that an overseas customer may not be reliable, and that payment may sometimes be difficult to secure. Our current client did not have these concerns about payment eventually being provided; its customers were all highly reputable, but there were still many issues - shared with most other businesses - about late payment.

Is your business looking to expand globally? Looking for cashflow support to keep things running smoothly? See how Invoice Finance could help

The solution

We found a lender able to provide a facility offering up to £1,000,000.

“Being short of £1million when work has been done and the project delivered is a problem for any business.”

There are several forms of finance that can be used to finance large export orders, but when we looked closely at our client’s business, we saw that International Invoice Finance was the most appropriate solution - because it would offer prompt payment. Even if the customer took weeks or months to pay, the funding provider would ensure that they could receive payment as soon as a consignment was shipped and an invoice issued to the customer - even if the customer was slow in settling their invoice.

There were some key advantages:

• It would provide a solution to the demands on cash flow associated with international business
• It would ensure prompt payment - for moderate costs
• It would allow the company to call on the international expertise of the provider - their international teams, with expertise and local contacts in most international markets 
• With a local presence and a full understanding of commercial practices, it can remove the uncertainties from doing business internationally.

“With Invoice Finance, you get a cash advance as soon as you issue an invoice.”

There are many providers offering Invoice Finance - but getting the most appropriate arrangement for your needs demands specialist help. 

At Rangewell, we’re an Access to Finance specialist and we work with over 350 lenders to offer you a comprehensive overview of more than 23,000 business finance products. We are also independent, which means we can work to search the entire market to find the answers that are most suitable for your business.