The export advance is a loan on a documentary basis with the payment term "documentary collection" or "documentary letter of credit". We bridge the period between the delivery of the goods and the receipt of the export proceeds or accepted bill. The documents which trigger payment serve as security.
As an importer you obtain with the advance against documents a loan for any collection or letter of credit documents. Repayment is made from the proceeds of the imported goods sold on.
Reduce liquidity risk
In export business many aspects need to be considered, including the risk to one's own liquidity. Forfaiting provides a solution here. With forfaiting you sell us receivables relating to your export business which are due at a later date. In doing so you improve your liquidity. And you prevent claims for compensation being made against you.
By selling the receivables, we assume the risk of default for you. This means that claims for compensation cannot be made against you if the importer is unable or unwilling to pay. You are liable solely for the validity of your receivable.
Two important benefits
You no longer bear the economic risk for your export business and we even assume country and currency risk for you. This allows you to cost precisely.
Plan well for success
It is best if you plan the forfaiting before concluding the export transaction. The costs incurred can be included in the price of your delivery and you agree with the customer a payment with a bonded loan. Here the importer undertakes to pay the agreed sum himself. Thanks to forfaiting, the payment term which you grant your customer does not affect your liquidity.
Improve your competitive situation
Buyer's credits make international business easier for you. Buyer's credit, which is for the most part covered by government credit insurance, ensures your contract partner abroad will be financially supported. Your customer will pay for the order it places with you with the credit granted. This government instrument for promoting foreign trade improves your competitive situation abroad.
The financing of a buyer's credit is structured medium to long term. One aspect is important for you: Your account is settled as soon as the goods have been delivered in accordance with the contract. The export transaction therefore becomes a cash settlement transaction for you. That is good for your balance sheet.
The buyer's credit process is very easy for you. The financing bank holds all of the necessary contract negotiations direct with the importer or his bank. You only have to make the exporter declaration - the financing results in no further obligations for you.
Attractive conditions for your partners
A buyer's credit is also attractive for your contract partner: The costs of financing are comparatively low and his local credit line is not affected by the buyer's credit.
Commitment to buy or protect with a letter of credit
With an export letter of credit, the exporter can also request his house bank to make an abstract promise to pay (confirmed letter of credit), provided the opening of the letter of credit allows for this.
However, the opening of the letter of credit often does not include a confirmation statement. If the exporter would still like the joint liability of his house bank, there is the option of a "commitment to buy or protect", which can be stipulated in a separate contract. This is virtually the same commitment as a letter of credit confirmation, only without the bank issuing the letter of credit being informed.
The costs of this additional risk protection are calculated based on the risk in the home country and the counterparty risk of the importer's bank.
Reduce administration costs
Factoring transactions improve your liquidity, optimise the balance sheet and reduce your administration costs. With factoring you sell your short-term receivables relating to goods services to a so-called "factor". The factor will immediately make available to you most of the purchase price which you have agreed with your customer.
Factoring transactions are mostly concluded within the scope of long-term contracts. In the process a limit is agreed up to which the factor buys your receivables, providing of course your customers have a suitable credit rating. The factor provides you with full protection against bad debt losses. The factor also does for you all of the debtor management, including dunning, collection and legal action.
The factor buys the export receivables as soon as it has received the appropriate copies of the invoices. The factor pays most of the countervalue, usually 90 %, immediately. You receive the remainder of the purchase price from the factor as soon as your customer has paid the invoice. Any reduction in the purchase price, for example for a discount or a notification of defects, is deducted.
The factor's services are paid for by a factoring fee. In addition to this interest also has to be paid of course for the time until the receivables are due. Factoring offers significant benefits for your current operations:
- You prevent the risk of default.
- Your liquidity scope is widened.
- If the acquired liquidity is used to reduce your own liabilities, the structure of your balance sheet is improved.
- The optimised balance sheet structure has a positive impact on your credit rating.
- The cost of your debtor management is reduced significantly.
Security in international trade
You are selling more and more abroad and want to ensure that your business does not fall through. For foreign customers who want to lease your products, we offer finance models in the most important European markets. You therefore promote sales with leasing contracts for your customers, whose liquidity and credit rating are checked by us in the buying country.
Our network provides country-specific know-how relating to economic, tax and legal issues, which allows you to be successful in countries such as Spain, Italy, France, Austria, Hungary, the Czech Republic, Slovakia, Poland and Russia. Qualified employees provide you with advice and local support in German. Make use of the trust and mutual support of a long-term partnership-like collaboration for your company's international breakthrough. Ask one of our leasing experts.