From smaller businesses importing their first products from overseas to established enterprises exporting larger inventory quantities around the world every year, trade financing can make the importing and exporting processes significantly easier. But another area where trade finance could be of great help is also business growth, by giving you the power to expand rapidly. To that end, here are just some of the ways trade finance can be used for supporting your business growth:

Reduce payment risks

When trading internationally, the biggest worry often comes from uncertainty, never having a guarantee whether sellers would truly ship the goods, and whether buyers will make payments in time. Trade financing helps to minimize these risks by speeding up any payments to exporters and promising importers that all the ordered goods have been shipped through official letters of credit.

On the other hand, the exporter’s financial institution could also provide them a loan while still processing any payments made by the importer, and then cover it once the payment is received, in an effort to keep the supply going instead of halting it due to transaction issues. By keeping the supply active and avoiding sudden standstills, businesses can ensure optimal practices and increase revenue, ultimately accelerating growth.

Manage your cash flow

Even if they don’t currently require any monetary assistance, the most experienced companies that frequently deal with exporting and importing will still have certain trade financing agreements set up, as this solution is generally thought to be a brilliant way of managing cash flow.

Trade financing will allow you to be in control of your money, and it will eliminate any surprises or unpleasantries by ensuring every purchase you make is already paid for in advance, and that every supplier you work with is equally compensated when you need them. Cash flow challenges tend to appear or worsen suddenly in any business, which is why maintaining a well-managed and stable working capital status through trade financing is so important for ensuring business growth.

Gain more flexibility

This financing option is also touted for its flexibility. If you choose a reliable Trade finance solution, you will have the freedom to set your own trading terms, increase your purchasing power, and possibly close your working capital gap, offering more versatility and fluidity than any other financing solution.

By using trade financing, you might also get the opportunity to improve and strengthen your relationships with international and local suppliers alike, and even partner with the best possible vendors for your company. In turn, this could empower you to go global, easily speeding up your business growth and success.

Avoid pledging assets

When acquiring a trade finance solution from any financial institution, keep in mind that it won’t depend on your financial history, meaning you don’t need a particularly good credit score or record history. Instead, trade financing is based on your future business deals and will be approved as long as you have a specific business transaction or purchase agreement in place.

As this form of funding is focused on your next order or transaction, trade financing also won’t require any assets as security, unlike most other financing solutions such as traditional loans. This will give you higher control of your assets and help you to avoid risk, thus allowing you to grow and expand more easily.

Pay for what you need

Every trade finance transaction is only limited to one import or export order, often down to the last cent. And considering the fact that you would only seek trade financing if you have a specific order to fund, opting for this solution means you will never have to pay more than what you truly need.

With trade financing, you also won’t be tied to any difficult contracts or long-term deals. You will only use this option when you have a real need for it, and you can always seek more funding for further transactions. Without any debt or continuing obligations weighing you down, growth can happen much more quickly and easily.

While growth might be key to success, it’s difficult to achieve for any business, especially when you’re dealing with certain monetary issues. Trade finance solutions can be of great help, empowering you to grow, expand, and go global.

Rely on financial ratios

Just taking a look at your finances isn’t enough to determine how well your business is doing. If you want it to work, there needs to be something you can compare your finances to. That way, you’ll be able to judge where you sit comparing to the previous month and comparing to other companies in your sector.

Some of the most important financial ratios to have in mind include liquidity (current assets + current liabilities) and profitability (gross profit ÷ total sales). You should be able to discover all of these figures in your company’s financial records and check whether they’re in order. If not, it’s a sign of poor financial health.

Carry out strategic reviews

When running a business, one of the worst things you can do is refuse to tweak your business plan in any way. It’s just that your surroundings keep changing and you’re bound to learn something new about your company’s finances every month. This means that about every 30 days, you should take a closer look at your business plan and update it using what you’ve learned during the last month.

This should help you detect any oversights in your approach that might’ve resulted in poor financial health. Moreover, you’ll know how to resolve the issue or improve the outcome which can only help improve your company’s finances.

Check your credit score

Repaying your loans is extremely important when running a business. If you fail to repay some of your loans on time or you simply don’t meet all the requirements, obtaining a new loan becomes much more difficult. If your company’s loan application gets rejected, it means your finances don’t look that healthy and some changes need to be made.

Therefore, checking your score is another way you can detect issues with your company’s finances. The good news is, you can still turn to a provider of bad credit loans and get more money for getting your business back on the right track.

Take a look at your cash flow

If you’ve been in the business world long enough, chances are you heard people say “cash is king.” This rule applies to every business out there and operating without cash is impossible. The problem is, cash flow issues aren’t necessarily easy to spot until there’s just no money left for your business to use.

Instead of waiting for the point when you struggle to pay your bills and staff members, you should keep assessing where your money is coming from and going to. If it looks like more cash is going out, it means your company could be doing much better. One of the ways to fix this is to start planning with a cash flow forecast and start saving money in order to keep your finances under control.

Use technology

One of the best things about running a business in 2019 is that you don’t have to do everything yourself. There are technologies you can trust with some of your tasks while you focus on your core operations. This includes finances as well and there are digital tools you can use to determine how well your company is doing in terms of finances.

For example, there’s software such as QuickBooks Online and Zoho Books you can use to manage your company’s finances. With one of these things in your arsenal, detecting any problems with your company’s money should be a real piece of cake. Dealing with money is one of the most difficult tasks business owners face. Still, it’s critical to determine any issues with the financial wellbeing of your company on time and act on them as quickly as possible. Rely on the five ways covered in this post and you should be able to detect any

Tag: cash flow

Speed Up Your Business Growth Using Trade Finance