Invoice financing for overseas customers

Secure your business cash flow with export factoring.


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Is exporting really that pot of gold at the end of the rainbow that people make it out to be? It can be, but not without a magnitude of cash flow risks that your business won’t have had to encounter before.

Once you start exporting, a whole new range of customers will fall into your lap. To improve the growth process, export factoring is there to help companies hedge the risk involved.

Compare a range of invoice finance options

Data indicated here is updated regularly
Name Product Min. Loan Amount Max. Loan Amount Loan Term Upfront Fee Filter Values
Timelio Invoice Finance
Up to 4 months
Get up to 100% of the value of your invoices without having to wait for customer payments, and with no minimum turnover or operating history required.
ScotPac Invoice Finance
From 1 year
No set amount
Improve your business cash flow by financing your outstanding invoices. No minimum trading history required, but minimum 12 - month term and $10,000 in invoices.
ScotPac Selective Invoice Finance
1 to 3 months
Finance your unpaid invoices on demand with terms of 1 - 3 months. 95% of invoice is paid upfront, with no minimum trading history required.

Compare up to 4 providers

What is export factoring?

This is financing that’s focused solely on exporters and the risks that follow them. Financing will usually be provided by banks or the government, as exporting leads to overall economic growth. Export factoring helps exporters to achieve consistent cash flow for growing and stimulating their own business and the economy.

How does overseas invoice financing differ from domestic?

The main difference between domestic and overseas invoice financing is the parties that are involved. With domestic invoice financing, the buyer, seller and financing party are involved.

Export factoring includes four parties, the seller (exporter), the buyer (importer) and the financing parties for both export and import. The financing party that handles the importing will need to qualify according to the export factoring company’s requirements.

How can you compare your export factoring options?

When considering your options for export financing, make sure you keep the following features in mind:

  • Fees. This will be a combination of interest charged on the funds that were financed as well as the service fees for making the service available.
  • Funds advanced. You will be qualified for an advance on a certain percentage of the invoices. Qualifications are usually based on features such as the payment records of the buyers, with the industry average being around 80%.
  • Payment and repayment. Ensure that you have clarity on how long it will take for the advanced funds to reflect in your current account and what steps you can take to follow up on this.

What export risks are reduced with invoice financing?

  • The risk of non-payment. When your clients are all Australian, it takes a lot less effort and cost to send a debtor’s confirmation letter or a letter of demand. You have the added certainty of getting the particular party blacklisted should they not honour their promise of payment. But when it comes to an international system, your actions against non-payment are much higher, especially at an SME level where legal fees can be heavy to carry.
  • Political risks. The amount of risk involved in this consideration will be dependent on the country to which you are exporting. For instance, Africa has a much higher risk of political instability than America does. Should there be an outbreak of unrest, your product might be destroyed or not delivered which eliminates the transaction opportunity.
  • Transportation risk. It is wise to take out extra insurance cover for the transportation period, which can cut into your overheads.
  • Exchange rate fluctuations. Exchange rates are very volatile, with the amount of risk dependent on the country to which your goods are being exported. Exchange rates can wreak havoc with your income if your profit margin is very low.
  • Cash flow dilemma. Payment usually reaches you much later than with domestic sales. The problem is that input costs will still have to be paid as incurred, and if you only receive payment at a later date you might have a shortage of cash in your business.

The cash flow dilemma reveals how beneficial invoice financing can be for a business that is operating in exports. Each of the risks above can be offset by choosing the right invoice financing solution for you.

The limitations of export factoring

Export factoring isn’t available for all exports. If your overseas customers take longer than 180 days to deliver payment, or do mostly cash transactions, export factoring will have limited functionality for your business.

How can you apply?

Before you start the application process, ensure that you have all of the required documents, which can differ from one provider to another. For example, you may need to provide your qualifying turnover per year, but all of the legal documentation that refers to your buyers, as well as a creditworthy export manager, will be included in the requirements.

Picture: Shutterstock

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