Export Factoring As a Form of Commercial Debt Collection

Export factoring is a form of commercial debt collection facility that encompasses the release of monies that have been tied up in export sales that are outstanding. In this process, an export company will enlist the services of a factor. The factor will then buy the debt that is being owed to the export company by a client, who typically tends to be a foreign client that has purchased an order on credit. The following are some of the things you should know about export factoring as a form of commercial debt collection.

Who offers export factoring services?

Export factoring services are offered by a number of invoice factoring lenders. They do so to facilitate international sales. However, not all the invoice factoring companies will offer facilities for export financing. Usually, this process will involve a different third party that will typically be based in a country that the company has a business in. This arrangement is conducive for payment to be collected in accordance with the standard method that has been put in place with invoice factoring lenders.

What does export factoring involve?

The process involves a third party doing the collecting of the invoice on behalf of the initial factor. Because of this, it is much more convenient to do so through a company that is already based in the country that the sale in question has taken place in. There is one main advantage that businesses have by using this process. The advantage is that the business does not have to bother itself with chasing down clients for payments. This ensures that the time and resources that would have been wasted doing that can be spent on concentrating on the running of the business.

Does export factoring differ from invoice factoring?

Most people assume that because more parties are involved in export factoring that it differs a great deal from regular invoice factoring. The truth of the matter is they do not actually differ substantially. When it comes to invoice financing, about ninety percent of the value of the invoice can be advanced. On the other hand, in export factoring a company can offer lower rates for the advance invoice payments through making use of export invoice financing. However, there are several advantages of making use of the regular method of invoice financing. For one, you can be assured that the chasing for payments has already been taken care of. Secondly, one can be assured of receiving a sound business advance from the company offering the factoring lending.