Given the chance, many small businesses would embrace the opportunity to enter international markets and expand their reach. But expansion into international markets can be difficult. Whilst 18.5% of Australian businesses are participating in international markets, this number would be far greater if they had access to extra cash. In a recent study, 16.1% of Australian businesses said that a lack of funding was a major factor preventing their business from growing.
Business owners that want to jump into international markets need to understand a vast range of business practices, including:
- What is the best way to distribute and store my product?
- Will a sales partner help me get the distribution that I need?
- How can I market my product to these new customers?
- What are the tax and legal implications of selling overseas?
If you are confident in your answers to these questions, you may want to consider Trade Finance as a way to fund these endeavours.
What is trade finance?
Trade finance relates to the funding needed to facilitate cross-border trade. However, it can be broadly divided into two main areas: import and export trade finance. When looking to secure funding for either your importing or exporting, lenders will traditionally offer you a few different funding options, including:
Import finance allows you to overcome the funding gap between your order and the payment required by your overseas supplier. It can be used to fund your overseas purchases, freight and foreign exchange costs that may be involved, as well as any duties that may be attached to importing the goods into Australia.
Export finance is a product that provides funding for your invoices from overseas customers, by enabling access to additional working capital. Export finance gives you access to the cash earned on your invoices from overseas customers.
Tradeline is essentially a line of credit that is used in the context of trade deals to enable you to overdraw your account. This ensures that you are able to handle any unexpected expenses that may occur during the trade process.
So how does trade finance benefit your business?
Trade finance enables flexibility and growth in your business.
It facilitates flexibility by allowing you to receive funding as soon as an order is made. This means you won't be short on cash between payment dates and will still be able to run your business without any cashflow problems. This can be particularly useful during seasonal downturns and is usually quite negotiable in terms of upfront deposits.
Furthermore, when you apply for trade finance your business is not judged on your own credit score, but rather on your business's creditworthiness. This generally improves the chances of your request being approved.
Valiant and your trade finance
Valiant is Australia's trusted business loan marketplace and has a range of loans options to suit all businesses. Call us today to discuss your options on 1300 780 568.
Alex is the co-founder and CEO of Valiant Finance. He brings a wealth of experience from his time as a banking consultant at McKinsey, and has a background in Business and Law.