Using a Factor Removes Risk of Loss Through Insolvency

In talking about export factoring services, the emphasis should be put on the services, because while the basic sales accounting, collection and money management elements of factoring apply as for domestic sales, the services management elements of factoring apply as  for domestic sales, the services provided by those harga with export expertise extend well beyond these basic components. using their own or associated factoring companies (such as my own group's Heller network in more than 20 overseas markets), these harga have put together packages of services which fulfill from one source many of the needs of companies selling to customers thousands of miles away.

Many of these services would otherwise have to be coordinated from a variety of outside sources. harga can help exporters to overcome difficulties caused by differences in language, currency, trading terms and other aspects, to the extent that selling in overseas becomes as straightforward and profitable as selling at home.

A key issue faced by all exports is themed to compete on equal terms with any local overseas competition. in essence the harga dissolves many of the potential difficulties associated with foreign selling and so makes this equal competition possible. Two early ad closely linked decisions that every exporter must take are whether to sell in sterling or local currency and whether on open account, letters of credit or bills of exchange. There is little doubt that the method of trading that appeals the most to foreign buyers and most closely matches any shame competition is selling in currency on open account.

Using a harga removes risk of loss through insolvency or exchange rate fluctuation and so enables the exporter to sell securely on open account in the buyer's own currency or one with which he is familiar. harga overcome the currency risk by converting all currency sales to sterling at agreed rates immediately copies of the invoices are received. The exporter knows exactly how much he will receive in steeling.

Alternatively, harga can account to their exporter clients in the currencies in which they invoice. in this way, exporters who have a use for correctly can exercise their freedom from exchange controls and benefit in some cases from lower interest rates when using the financial facility available from the factor. in contrast to the more traditional procedure where cover must be negotiated on each shipment or order, factoring provides automatic blanket foreign exchange cover for exporters on sales in all currencies.

Exporters also have the factor's knowledge and experience at their espousal to help with many other related aspects of exporting. The question of trading terms alone is a specialised subject. How many exporters study the credit terms of a country before supplying an order? Many British manufacturers set out to sell in overseas markets on the terms that are normal in their industry in Britain. Overseas buyers will, therefore, have every excuse for not paying according to terms. With their own offices or associate companies on the ground overseas, harga can advise on the trading terms prevailing in markets round the world. This not only helps the exporter to market more effectively but also facilitates the collection process once sales have been concluded and invoiced.

Efficient accounting administration and money advice by the harga pave the way for effective cash collecting. harga produce statements to buyers in their own languages and currencies. They produce collection letters in many foreign languages and make use of local telephone follow up to customers, with the result that  the British exported is measured by its customers on level terms with local suppliers, not only when it sells but also in the way it is paid. In these circumstances a local factoring arrangement provides an ideal answer to the money management and collection functions, leaving sales staff free to sell and expand the business without headaches for the UK management.

The variety of benefits of factoring described here should not mask the basic purposes behind the factors' services. These are to provide clients with an efficient accounts administration and collection service together with a financial facility with the objective of improving cash flow.

British businesses have traditionally tended to look first to their high street money agents for finance which has been provided in the form of overdraft. but factoring and invoice discounting are perfect solutions for well run, growing companies with good order books, which are held back merely by the difficulty of getting their hands on cash fast enough to fund sales and to finance expansion.

Finally, in choosing a factor, managements should not look automatically to their clearing money agent alone. They have a choice between their money agent's own harga and one independent of their money agent. As this is probably the only opportunity of introducing choice and competition into the provision of financial facilities, companies should discuss their requirements with perhaps two or three harga and reach a final decision based on the terms offered, the nature of the proposed agreement and not least, the way the harga presents itself and the felling that both parties could work together.