International cash flow management is an important aspect of business operations. Dealing with clients from different geographical regions is a challenge due to varying time zones. Late payments from overseas clients can be a cash flow issue for small and medium-sized enterprises (SMEs). This not only affects a business’s operational capabilities but also their growth potential as well as creating new financial burdens. The advanced features of international invoice factoring can help businesses overcome these challenges by providing the added liquidity needed for business growth.
Simply Factoring Brokers works with businesses to access international invoice factoring services that help them manage cash flow and facilitate international expansion. In this blog post, we will discuss international invoice factoring, the mechanics behind it, and the reasons why it is considered the most convenient financing option for businesses looking to expand internationally.
What is International Invoice Factoring?
International invoice factoring is a form of finance where a company sells its unpaid invoices to a factoring company for cash. This system allows businesses to get funding at a reasonable rate as they manage their businesses till they pay for their services. Unlike traditional domestic invoice factoring, international invoice factoring is designed specifically for businesses that have clients or customers in other countries.
The factoring company will give an advance of 70% – 90% of the invoice value and assume the responsibility of collecting payment from the international customers. After payment is received from the customer, the factoring company pays the balance withhold a small portion as their fee.
International invoice factoring makes it possible for an enterprise to manage cash flow
more efficiently by turning overdue invoices into immediate operating capital regardless of customers’ location.
How Does International Invoice Factoring Work?
International parts of invoice factoring processes work the same as domestic parts, but there are other elements that need attention because of the distance involved and international dealings. Here’s a detailed explanation of how the process works:
- Submission of Invoice
The business sends its unpaid cross-border invoices to the factoring company for consideration. These invoices should be remitted to customers who have an overseas presence. The factoring company will usually have some risk assessment policies that they need to complete before any funding is committed.
- Advance Payment
Most factoring companies pay their clients an advance which corresponds to a minimum of 70% and maximum of 90% of the invoice amount after confirming the unpaid invoices are valid. This payment enables the firm to remain solvent while waiting for payments from overseas clients.
- Payment from Customer
In international invoice factoring, the factoring company will either collect the payment directly from the international customer (in the case of full-service factoring) or let the business continue collecting the payment themselves (in the case of invoice discounting).
- Final Payment
Factoring companies, after receiving payments of the invoices from clients, will pay the businesses the balance of the invoice value minus an agreed fee for services rendered. This enables businesses to maximize value without diversifying operations, increasing the amount available to them mid-operation, and ensuring they can grow.
Business can avoid payment challenges from international clients by collaborating with a factoring company that handles international invoice factoring. This kind of collaboration guarantees a business’s operations run smoothly.
The Benefits of International Invoice Factoring
Many businesses find that international invoice factoring improves their working capital. Here are some additional benefits a business gains from international invoice factoring:
- Improved Cash Flow
The most significant benefit of international invoice factoring is the improvement in cash flow. Businesses can attend to their operational costs, pay their suppliers, and even reinvest in growth opportunities. A business no longer has to wait for their customers to pay their outstanding balance for their invoices.
- Decreased Credit Risk
International clients pose a certain risk in late or non-payment due to different legal systems, time zones, and language barriers. Many businesses also take the risk of having overdue payables and bad debts. International factoring companies take away this risk by assessing the credit worthiness, thereby reducing nonpayment risks, of international clients. This captures nonpayment risks and brings greater ease when dealing with overseas transactions.
- Global Expansion Support
International invoice factoring serves as a great marketing tool for businesses planning to expand globally. With access to working capital, businesses can fund international marketing campaigns, pay for additional staff, or purchase inventory to keep up with soaring demand. Businesses looking to enter new markets will find this flexibility extremely useful.
- No Need for Collateral
Everything has its advantages and disadvantages. Unlike traditional bank loans, international invoice factoring does not need collateral; rather, the factoring company secures the loan against the value of your invoices. For businesses that lack significant assets to pledge, but are in need of financing, this is ideal.
- Outsourced Collections
Most factoring companies take it upon themselves to collect payments from international clients, meaning they provide credit control services. This lets businesses concentrate on their core activities while the factoring company deals with the collections.
How simply factoring Brokers assist with international invoice factoring.
For businesses looking for international invoice factoring solutions, Simply Factoring Brokers is the right partner. Our team leverages a large network of factoring partners to ensure that you receive the attention your business deserves. Here’s how we help:
- Custom Solutions
Every business has a unique problem to solve. We offer custom international invoice factoring solutions to different businesses. We assist new small businesses as well as large companies with expansive operations in finding the right financing solutions.
- Professional Support
Dealing with different currencies, payment methods, and legal frameworks from different countries make international factoring invoice complex. Our professionals help you navigate the process while ensuring that you understand how international invoice factoring operates and the benefits it brings to your business.
- Access to a Wide Network of Lenders
We have factoring companies that specialize in international invoice factoring, and we have partnered with all of them. This taps us into an extensive network which enables us to provide the lenders with competitive rates and favorable terms.
- Faster Access to Funds
We adhere to a specific procedure, and that helps you get funding almost instantaneously. It does not matter if you are looking for cash to fill the gap between invoice collection and payment or require quick funds to support your expansion plans, you can always get help when you need it.
- No Hidden Fees
Simply Factoring Brokers practices transparency, and we take pride in that. We always explain the costs related to international invoice factoring, and this allows every user to choose the most suitable option for their business.
Final Words
Businesses seeking to manage cash flow and enable better age control of an overseas market can hugely benefit from international invoice factoring. Converting outstanding invoices to working capital can help crowdfund expansion internationally without the constant worry of payments being delayed.
Our goal at Simply Factoring Brokers is to help businesses access the most suitable international invoice factoring solutions that are tailored to their unique requirements. Our expert guidance in combining your specific needs with our tailored solutions, backed by a broad network of lenders, is bound to take your business to the next level.
If your company struggles with cash flow or is looking to expand internationally, then surely international factoring invoices is the answer you need. Simply Factoring Brokers is the perfect place to visit to help your business reach its fullest potential and grow internationally.