When it comes to international trade, cash is king. That being said, it can be difficult to support and grow your business if your products are being sold globally. Many times, retailers are guaranteed a period of 30-plus days to pay for their orders, which can strain cash flow while you wait on payment.
Export bill discounting opens up the liquidity that has been sitting in accounts receivable for your company. It has the potential to turn accounts receivable into cold cash quickly, increasing liquidity to keep the company running. Why should your business consider export bill discounting? Here are the five reasons:
Efficient Cash Flow Management through Bill Discounting
In simple terms, export bill discounting is a finance arrangement that enables businesses to sell their export invoices to a third-party financial institution like Tradewind Finance, which pays for them at a discount. In exchange, the business receives a significant portion of the value of the invoice, typically up to 95%, from the finance provider rather than having to wait for the invoices to be paid off by its customers. This means that businesses can inject cash into their operations and better manage their cash flow, service immediate financial obligations, and capitalize on growth opportunities without having to wait for the long payment cycles of international trade.
1. Accelerated Cash Flow:
Invoicing often becomes the lifeline of any business, carrying with it a promise of future money. The waiting period for invoice payment could significantly affect cash flows and, in turn, cause possible operation constraints and lost opportunity for growth. In place of waiting for weeks and months until customers liquidate an invoice, export bill discounting can help such businesses access a substantial portion of the invoice value upfront. The cash infusion at this time allows the business to fulfill its current financial obligations, take advantage of the most current opportunities for growth, and stay ahead in the competitive marketplace.
Tradewind Finance enables businesses to draw up to 95% of the value of their invoices upfront with our invoice discounting solutions. This allows businesses to better meet their financial obligations and, at the same time, harness the growth opportunities that present themselves by keeping a healthy circle of cash flows.
2. Enhanced Working Capital Management:
Effective working capital management is the backbone of any company. With export bill discounting, firms can convert their accounts receivable into liquidity without taking out a loan or exploiting their existing credit lines. Unlike other forms of financing, the export bill for the discounted money would not display as debt on the business’s balance sheet. Therefore, businesses can enjoy better financial freedom from this arrangement. All of this means that companies in any industry can more skillfully handle variations in cash flow, no matter the macroeconomic environment.
3. Mitigation of Credit Risk:
International trade is an area full of credit risks since the business is exposed to uncertainties as a result of dealing with customers across geographical borders. Among these risks are delayed payments and unsettled invoices, which disrupt cash flows and operations. Bill discounting is one active risk mitigation strategy where a business can turn its account receivables into instant cash and is shielded from a possible liquidity crunch. Besides, bill discounting facilities also lessen the reliance on credit periods, help to manage the delay in payments, and further create strong relations between the buyer and seller.
4. Improved Financial Flexibility:
One size does not fit all, especially in corporate financing. Traditional payment methods often have strict rules and regulations that limit businesses to source finance freely. Export bill discounting offers greater flexibility compared to regular invoice payment approaches. The possibility of obtaining access to financing as a need arises without the burden of a fixed program, fixed rate of repaying obligations, or a prolonged commitment provides an opportunity for businesses to respond to a changing business environment within no time.
Tradewind Finance understands that businesses need different products to suit their performance and geographical areas and offers many products in this aspect. Supply chain finance, invoice factoring, or dynamic discounting allows businesses to select instruments that best fit their business strategies and cash-flow dynamics. This way, companies can optimize their financial positions, respond to new opportunities, and manage difficult conditions better.
5. Streamlined Operations:
While running a traditional financing process, the operations are quite complex and time-consuming. Businesses involved in international trade have to wait for approvals and prepare piles of documents serving as evidence for financing. For small businesses, these hurdles can discourage them from getting the funds they urgently need. However, export bill discounting makes the process easier with a simpler application and a fast funding turnaround. This means that businesses can optimize their operations and allocate their resources to work on product development, sales, and customer engagement ensuring increased productivity.
In conclusion, the advantages of using Export Bill Discounting with Tradewind Finance’s convenient discounting platform are numerous and appealing. Businesses can save valuable time and resources with this hassle-free approach. From immediate cash flow and enhanced working capital management to improved financial flexibility, export bill discounting offers businesses a strategic advantage in the global marketplace. By transforming receivables into immediate cash, businesses can experience their full potential for growth and success.
Are you also interested in taking advantage of export bill discounting and developing your business further? Contact us to see how we can optimize your cash flow and ensure your business prosperity.
