Exporting Your Goods
Post-Shipment Financing
You may need to finance the gap between the time goods are sent to the overseas buyer and the time you are paid according to your agreement with your customer. The following seven questions and answers can you evaluate your options:
What additional challenges exist in payment collection?
What options exist for post-shipment export financing?
How could NORTHSTAR Trade Finance help us?
What is supplier credit?
What is foreign buyer credit?
How can we leverage our accounts receivable if we need payment sooner?
How can we acquire funds based on a promise to remit from the supplier’s bank?
What additional challenges exist in payment collection?
- Longer delivery and payment time frames
- Exchange rate risks and exchange controls
- Limited and costly dispute settlement mechanisms
What options exist for post-shipment export financing?
- Extended operating lines of credit
- Short-term cash flow bridge loan
- Buyer or supplier credit from your bank
How could NORTHSTAR Trade Finance help us?
NORTHSTAR offers financing of export sales of $100,000 to $5 million to credit worthy foreign buyers of eligible Canadian goods, with repayment terms of one to five years.
What is supplier credit?
It involves an arrangement in which credit terms are included in the supply contract. Usually there is also a fee for export credit insurance for commercial risks, such as default by the buyer, insolvency of the buyer, refusal by the buyer to take delivery of the goods, as well as political risks, such as the inability to transfer foreign currency, government action preventing payment being made, war and civil war.
What is foreign buyer credit?
It is an arrangement where you contract with an overseas buyer to supply capital goods or services. There is a separate and parallel loan agreement between a lending bank (normally in the exporter's country) and a borrower (often a bank) in the buying country.
How can we leverage our accounts receivable if we need payment sooner?
- Sell your accounts receivable at a discount price (usually at high discount rate) to your bank or a specialist firm (“factor”), otherwise know as factoring your receivables.
- Request financing from your bank or a finance company secured by, but otherwise independent of, the export receivable.
How can we acquire funds based on a promise to remit from the supplier’s bank?
Known as acceptance financing, this involves receiving immediate payment at a discounted rate based on a banker's acceptance that has been created under a letter of credit or a collection.