Finance Solutions For Companies Venturing In The Import Industry

Importing pertains to the process of bringing in goods or services from anothercountry. They come from foreign countriesand are usually brought in for resale. Manycompanies find this type of business quiteattractive since the products or services from other countries are really affordable and they can be resold for a nice profit margin.Although the process of importing and reselling goods seems like a simple concept, entrepreneurs who are considering starting this kind of business will have to overcome various hurdles. Oneof these is finding the right financing solution.At present, there are various finance solutions or methods you can choose from. The most recommended one by finance experts are:Factoring in accounts receivables.Also known as asset-based loans, this method involves selling your credit accounts or accounts receivable to a bank,lending company, or other financing institution. Accounts receivables are usually sold at a discount, between 80-90%of the face value of your credit accounts. An advance payment will be given to you by the factoring company, about of 2-3%, for the accounts you would normally have to wait on for payment.Purchase order financing.This method has similarities with asset-based loans. The main difference with thisfinancing solution is that you take your invoices or purchase orders and assign or sell them to a financing company. This company will then assume the risk and thetask of billing and collecting. When the goods are produced, the financing company collects the payment from the customers, takes its cut of the proceeds, and pays you the profit. This option is highly recommended if your profit margin is high enough on the goods you are importing. Having a good and reliable supply chain and creditworthy customers are important factors to consider as well.Inventory financing.Although inventory financing is an expensive solution, it is still a highly effective way of financing an importing business. Under this method, you will haveto use your present inventory to secure a loan that will permit you to buy the imported goods your customers want or need. Because of this, you can effectively increase your inventory without impacting your cash flow. However, with this option, it is crucial to make sure that you can service or repay your debt. Inventory financing comes in three types: blanket inventory lien, floor planning, and field warehousing. Choose the type that best meets your requirements.Read more aboutimport finance here.Article Source:http://EzineArticles.com/expert/Danica_I_Bridges/1867626