- 22 May
Pre-Invoicing Requires Trade Finance
Pre-invoicing is normally a "no-no" in the invoice finance arena but in this case we found a way around it for our client.
It means is that the supplier is raising their invoice, to their debtor, before they have delivered the goods (or services) to which the invoice relates. The normal course of business would be to raise invoices, in arrears, after delivery of the product or services.
The Problem With Pre-Invoicing
Normally, preinvoicing presents a huge problem to an invoice financier as they rely on the invoices being collectable, in order to recover their prepayments should they need to. The problem with a pre-invoiced transaction is that the debtor could rightly refuse to pay, as they have not yet received the goods. In the normal course of business, the delay in supply may not be an issue. However, in the event of the supplier failing, going into Administration or Liquidation for instance, the supplier may not be able to go on to provide the product, in order to make the invoices valid and payable.
How Financiers Identify Invoicing Problems
Due to these issues, debtor finance companies get very jumpy when they identify pre-invoiced transaction on a client's sales ledger. With factoring, this can often happen when a credit controller calls the customers, and they say that they haven't received the goods for a particular invoice. With invoice discounting, it can sometimes be picked up at a regular audit. An audit is a regular spot check conducted remotely, or at the client's premises and it may include the discounter's auditors calling a few debtors, in the name of their client, to verify some of the debts on the ledger. This is called "telephone debt verification".
Practical Cash Flow Management
Despite this, raising invoices in advance of completing delivery can often be a step taken in the interest of practical cash flow management. In some cases debtors may be quite happy with this, and it accelerates the cash flow of the business by getting payments in more quickly. However the issue for financiers remains.
This was the case with a client that were were able to help recently. They were importing timber from abroad and so needed to pay their supplier, before they would ship the containers of timber. Their solution had been to pre-invoice their debtors but this had been flagged by their invoice finance company, leading to funding restrictions. Even after moving providers, the issue occured again and caused problems with the new provider.
The Answer - An International Finance Corporation
The answer was pretty simple. This client was an ideal candidate for trade finance, linked to an invoice finance facility. Trade finance (also called import finance) bridges the gap between having to pay your foreign supplier and receiving and selling the imported goods. We were able to put in place a combination of facilities. The import finance, from a international finance corporation, and an invoice finance facility to further speed up the cash flow of the business.
Import finance finance can work hand-in-hand with invoice finance, significantly extended the time that the importer has to pay their overseas supplier. This type of end-to-end supply chain finance takes away the need to pre-invoice.
- 11 Sep
Bibby Financial Services Launch Pre-Shipment Trade Finance
Bibby Financial Services (BFS) have launched pre-shipment trade finance to support UK importers needing to pay overseas suppliers in advance of goods being manufactured and shipped.REQUEST A CALL FROM BIBBYTraditionally, trade finance is only available to pay overseas suppliers, once the goods have been shipped. It them provides the importer with the opportunity to sell on the shipment of goods,...
- 26 Oct
Funding Exports To The Former Soviet Bloc
Another example of the diverse range of customer issues that we are able to solve. We were contacted by an exporter that has two debtors based in a former Soviet bloc country. He was looking for finance against his sales to these debtors and had not had any success finding a funding company that could assist with prepayments against his invoices.We spoke to a number of our funding partners and...
- 22 Oct
Trade Finance For UK Purchases
Trade finance is often presumed to be a service solely for importers, it is often referred to as "import finance". However it can also be used to help you purchase goods from suppliers who are based in the UK. A better name is perhaps "purchase order finance". It is not exclusively for imports - any UK purchases have the potential to be funded and you can discuss your particular requirements with...
- 09 Oct
How To Increase Your Buying Power
If you are in a position where you could accept more orders if you were able to buy more goods, you may want to know how to increase your buying power. We have a solution called trade finance, a financial service that allows you to buy goods by bridging the cash flow gap between paying your supplier and receiving payment from your customers.You may even be able to negotiate pricing discounts with...
- 05 Aug
The Benefits Of Using A Trade Finance Broker
We have just seen a real example of the benefits of using a trade finance broker, in action.We had a trade finance enquiry recently, from a company that were looking for a trade finance facility in order to fund imports to the UK.Initially, the company used one of the direct contact forms on our site, to request a quote direct from one of our panel of trade finance companies. So by using this...
- 21 Oct
Woodsford Tradebridge Launch Event
I was very pleased to be invited to the launch party for Woodsford Tradebridge which was held last night, on the iconic London Eye. A superb venue for such an event. The event took place during 2 rotations of the eye and guest took in some amazing views across the city of London whilst champagne and canapes were serves during the "flight".Woodsford Tradebridge is a new trade finance and invoice...
- 06 Sep
Trade Finance Quotes
We are currently working on trade finance quotes for customers and we will shortly be adding some more details of recent costings to our website. On the FundInvoice site we have always tried to bring customers actual examples of prices, and trade finance is the one area where we want to add some more actual examples so clients have an idea of the costs, even before we get them a quote.It is a...
- 09 Jun
Meeting With A Trade Finance Company
We had an interesting meeting with a trade finance company today. They serve the more credit worthy end of the market, but do so without any security whatsoever i.e. no personal guarantees or other security required. This means that it will not affect your other borrowing facilities. In addition to the normal funding of imports, they can also provide a trade facility for transactions within the...
- 05 Apr
Trade Finance Available
Trade finance can work in a number of ways but in simple terms it bridges the gap between having to pay for goods (often shipments of imported goods) and getting paid for them by your buyers, once you have sold them. I started work in trade finance, in 1988, way back when Barclays had a trade finance arm called Bexco Ltd. Since then there have been several revolutions of providers withdrawing...
- 02 Jul
Trade Finance and Import Finance
Trade Finance (or import finance) can be used to finance imports from abroad into the UK. You can even repay the trade finance using your sales invoices via invoice finance - a very neat solution for importers: FundInvoice | Trade Finance & Import Financing | FundInvoice....
- 09 Mar
Trade Finance Article
Trade Finance can be used to finance the import of goods from abroad and bridge the gap between having to pay your supplier and receiving/selling the product. This article is about: Trade Finance...
- 30 May
Paying Overseas Suppliers By Letter Of Credit (LC)
A "letter of credit" is a financial instrument issued by a bank or similar financial institution that requires the supplier of goods to submit specified documents in order to receive a specified payment after a given time.This gives the overseas supplier the confidence to ship your goods knowing that they will be paid if they satisfy the requirements of the letter of credit and it gives the buyer...
- 25 May
Trade Finance Can Fund Your Imports From Abroad
If you are an importer of goods from abroad trade finance could help you fund and pay for those imports and shipments.If you have confirmed orders from well known debtors against which you are importing goods into the UK, trade finance could make the payments to your overseas suppliers for you (by letter of credit if necessary) and then the trade finance is repaid from the money received from...