There are increasing opportunities for companies to increase their sales by exporting but they are often nervous about trading into markets due to language and currency difficulties.

Go Global with a Positive Cash-flow

There are increasing opportunities for companies to increase their sales by exporting but they are often nervous about trading into markets due to language and currency difficulties.

However figures released by the Factors and Discounters Association (FDA) for 2005 revealed that there are now 43000 British based companies using factoring or invoice discounting that between them account for £143Bn of sales! The largest percentage increase according to the FDA is in the export market that has grown by 27%. This is not altogether surprising as working capital requirements for exporting is on the increase as British companies become more involved with the new members of the EEC, India and China.

Most factoring companies purport to an interest in factoring but only Bibby Financial Services has a company dedicated to exports. Bibby Factors International (BFI), part of the Bibby Group that includes Aberdeen-based Bibby Offshore, has a dedicated team of credit controllers who are fluent in the major European languages and send out correspondence in the local language. BFI is a global player with offices in Canada, Poland, France, Australia, Southern Ireland and five branches in the United States, with plans for more to follow in the future.

So how does export factoring work?

1. The client raises his invoice and sends a copy to the factor.

2. On receipt the factor releases 80% of the invoice value to the client paid directly into his bank.

3. BFI will then implement credit control procedures on behalf of the client in accordance with their pre-agreement discussions.

4. When the customer pays the factor the client receives the 20% balance of the invoice less the factor’s charges.

5. The charges in factoring are two-fold: the cost of administering the credit control and a charge for the use of funds. Each business is coasted separately based on the number of customers on the sales ledger and the length of time customers they are taking to pay. The average administration cost is 1.1% and funds rarely exceed 3% over bank base.

By using factoring effectively businesses can take re-negotiate their purchase terms and thus offset the factor’s charges. The main advantage however for the budding under-capitalised entrepreneur is the advantage of having a financial facility geared to performance that allows him to take on orders that he previously shunned due to lack of working capital. The factor also has a library of credit information that can be of vital importance when deciding upon supplying someone who has been plausible over the phone only to decide they conduct their business from a mobile phone!

Quotations are free and non-committal by either party so if you would like to know the costs for your company to improve its cash-flow contact: -

 Bill Flockhart, Business Development Manager
 Bibby Financial Services
 Unit 2, Block B,
 Kittle Yards, Causewayside,
 Edinburgh EH9 1PJ

 Tel:  0131 662 3228
 Fax: 0131 662 3202 
Email: bflockhart@bibbyfinancialservices.com
www.scottish-export-clubs.co.uk