The global market is essential but highly competitive, with many companies operating within it. This is where international factoring becomes a key tool for success. Understanding the International Factoring Advantages can make the difference between smooth operations and cash flow disruptions.
What is international factoring?
International factoring is a financial service that allows companies to sell their accounts receivable to a specialized entity known as a factoring company.
This solution is particularly helpful for businesses that export goods or services, as it provides immediate liquidity while mitigating risks associated with international transactions, such as payment delays or defaults.
In essence, international factoring facilitates cash flow management, optimizes operations, and allows companies to focus on global growth.
How does it work?
The international factoring process is simple but highly effective:
- Sale of international invoices: The exporting company submits outstanding invoices to a factoring entity like Expocredit.
- Advance of funds: Expocredit advances a percentage of the total invoice value, typically between 80% and 90%.
- Collections management: The factoring company assumes the responsibility of collecting payments from international clients.
- Remaining balance payment: Once the end customer pays, Expocredit transfers the remaining balance, minus a service fee.
This model not only ensures immediate liquidity but also reduces administrative burden and financial risk for exporters.
At Expocredit, we are experts in this type of factoring. Click here to learn more about our International Factoring solutions.
Advantages of International Factoring
The International Factoring Advantages are numerous and provide practical financial solutions for global businesses:
Immediate Liquidity
With international factoring, companies can access working capital within days, allowing them to cover operating costs, invest in new projects, and maintain business continuity.
Risk Mitigation
By choosing non-recourse factoring, exporting companies transfer the risk of non-payment to the factor. This brings peace of mind, knowing they’re protected from possible defaults by international customers.
Cash Flow Optimization
Global operations often face long payment terms. International factoring removes this concern, ensuring a steady and predictable cash flow.
Simplified Management
Outsourcing collection management allows businesses to focus on core operations while the factoring company handles the administrative and legal aspects of international collections.
Improved Negotiating Power
With immediate liquidity, companies can negotiate better terms with suppliers, access early payment discounts, and strengthen commercial relationships.
Example of International Factoring
Now that you know the International Factoring Advantages, here’s an example of how it works in practice.
Imagine a company exporting textile products to Europe. One of its main clients has a 90-day payment term, but the company needs capital to fulfill a new order.
By using Expocredit’s international factoring service, the company can sell its outstanding invoices worth $100,000. Expocredit advances 85% of the amount within 48 hours, allowing the company to cover operational costs and take on new contracts without disruption.
In addition, Expocredit manages the collection from the European client, reducing administrative workload and eliminating payment risk.
Expocredit: Experts in International Factoring
At Expocredit, we are much more than a financing company — we are your strategic partner in global business growth.
For over 20 years, we’ve helped international companies overcome financial challenges and strengthen their operations in global markets.
We operate in countries such as Colombia, Mexico, Chile, Ecuador, and Peru, which gives us deep insight into diverse global markets.
During the pandemic, we demonstrated our commitment to our clients by increasing our credit line by 40 million pesos, supported by financial institutions.
With our international factoring solutions, you can:
- Access immediate liquidity without incurring new debt.
- Reduce risks related to international clients.
- Optimize cash flow and focus on growth opportunities.
The International Factoring Advantages make this financial tool essential for companies aiming to expand globally.
At Expocredit, we are ready to support you every step of the way toward global success.
Click here to contact our team today via our website. Fill out our form and one of our advisors will get in touch with you right away.