An Overview Of International Trade Financing

The first launch into a new market or with a new B2B sale is always the most stressful and challenging for a small to mid-sized company. This can be made more complex if the B2B sale is to a buyer on the other side of the world.

The flip side of the coin is that these markets are often free from competition, allowing even a small business to be able to corner the business and to establish their brand. With this advantage, a small company can do business internationally and compete effectively with a large corporation or even an established global company.

There are many different options to consider for international trade financing that US businesses can use. Choosing a financing service with the ability to offer a range of different services will be important in finding the best match for companies completing international exports.

Options to Consider with International Trade Financing

To assist in selecting a company for international trade financing, here are some possible financing methods that will be beneficial to any business.

  • Export Credit Insurance – this is a specialized form of insurance that protects US companies from risks in exporting to international locations. This is an option offered through the EX-IM Bank and can only be offered through approved EX-IM Bank lenders.
  • Pre-Export Financing – while traditional factoring requires an accounts receivable to use in obtaining funding, this limits a business that may have a large international order to fill and limited working capital. Through pre-export purchase order financing funds can be available to the business much earlier, even for purchased items for an export sale.
  • Equipment export financing – for those American companies selling heavy equipment to international buyers, some trade financing companies offer an export financing program. This allows the US company to obtain up to 85% of the value from the export financing company while the buyers pay out over time.

Shopping around to consider different options in trade financing for international sales will be important. There are different programs offered by various companies that are ideal choices for a business to consider.

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