Reduce your export risk and stabilize your cash flow.

International Factoring: The Ultimate Guide for Exporters

What is international factoring?

International factoring is a financial product that can help make trade go more smoothly when exporting products from a foreign country to the United States. International Factoring is a term used interchangeably with services also described as invoice factoring, invoice discounting, accounts receivable factoring, accounts receivable financing, or A/R factoring. In international factoring, you are selling the export invoice to a finance company when goods or services are provided in return for an initial advance.  When the client pays the final invoice (30 days later and sometimes longer), the remainder of the payment is made minus a fee.  Because the finance companies, referred often to as factors, in these deals are often located in the same country as the importer, the exporter gains the benefits of local collection resources to help ensure payment is made promptly.  In addition, international factoring can provide cash flow support to withstand longer payment periods in their trade deals.

How does international factoring work?

What are the benefits of factoring international trade exports?

Fast Payments

Instead of waiting 30 days or longer for payment from your importer, we advance the cost of the product to the exporter once the product has been delivered to the Importer (Advance of 80% less our commission).

Credit Evaluation

We conduct credit investigation of debtors in the United States for our clients.

Risk Mitigation

We have the ability to convert international risk into local risk and can leverage our operations to help you collect.

Increase in Exports

With access to capital and better cash flow, exporters are able to conduct more transactions and turn over more product. 

 

What you need to apply for international factoring?

  1. Fill out online an application

  2. Support documents:

    1. Copy of valid identification
    2. Financial statements – last 2 years
    3. Interim Financial Statement
    4. Accounts Receivable Report
    5. Accounts Payable Report
    6. List of clients to factor
    7. Incorporation of the Company

How can I get started and how long does it take to get funding?

The first thing to do is to fill out the online application or call us directly and one of our representatives will get the process going. The whole process should not take more than 48 hours from us receiving your application and supporting documents.

What types of companies use factoring and who do we fund?

Companies that get the most out of factoring are growing in sales and whose customers ask for payment terms. If your company has a product or service that sells with payment terms, there is no better tool for you than factoring. Factoring can be used by almost any company that gives payment terms instead of receiving immediate cash for the products it sells. Companies use factoring to supply the money needed to expand operations or maintain a current production level without sacrificing other areas of the business.

Credíto Real USA Business Capital provides international factoring for a variety of industries including, but not limited to:

  • Perishables
  • Non-Perishables
  • Services (BPO)
  • Light Manufacturing
  • Industrial
  • Process Products
  • Textiles
  • ***Contact us to inquire about other industries

Here's what some of our customers are saying.

"As an exporter, I feel that my hands are tied, and I’m at the mercy of my clients to receive my payments. I’ve had to extend the credit terms with some clients and our cash flow depends on the ability of my clients to repay. Local financial institutions are not working with the exporters, which makes things even more difficult. The International Factoring Program of Crédito Real USA Business Capital is a great solution for our financial needs."
Marvin Rubio
Panama
5/5

FAQ

No. factoring is a service that is accounted for as an operating expense instead of a debt. Entering into a factoring agreement will not hurt your credit history or increase liabilities on your company’s balance sheet.

In our experience, having factoring is seen positively by customers if you are associated with a reputable factoring company. The reason is that your customers will know that you have the cash needed to grow as much as you want and continue to provide payment terms to them. It’s a win-win scenario in which your customers continue to get their required payment terms. You continue selling, and we service and maintain your terms in the commercial relationship with your customer.

This is a common misconception for many companies that are new to factoring. Factoring is one of the oldest financing programs and is very common in today’s marketplace. Many corporations of all sizes use it as a cash flow solution. Your customer may already be sending payments to us from invoices from another vendor.

We do it for you as part of our factoring service. We will check the creditworthiness of your customers and will give you a credit limit for each of them. Better yet, we will purchase your receivables up to the credit limit that we establish for them.

As quickly as in a few hours once approved and confirmed. Keep in mind the first invoice from every client typically takes 12 to 24 hours to fund after all the documentation is received, as the factoring company has to get set up with your client to accept payments on your behalf.

If the bank has denied me a loan, can I still get funded by Credito Real USA Business Capital?

Yes. Our decision process is different because we focus on the creditworthiness of your clients.

No. You have the freedom to select the invoices you wish to factor in depending on your cash flow needs. However, they must receive all payments to avoid confusion because each client you factor in is formally notified with instructions to remit all payments to the factoring company. You will only incur fees on the receivables factored, and all payments are immediately redirected back to you when received by us.

Advance rates can range between 80% of your accounts receivable depending on your industry, your company’s specific situation, and the frequency with which you will require factoring.

This scenario happens from time to time with some of our clients. After we do our best to educate and convince your client of the value of this service, we will, as a last resort, try to establish a non-notification relationship that will allow us to work silently with your client. We will open a lockbox account under your name so that payments get sent into that account, which will be redirected to us by the bank. This type of arrangement is typically determined by the factoring company and works on a case-by-case basis.

While you have the freedom to select the customers you wish to factor in, we recommend that you focus on your best-paying customers demanding payment terms. Invoice factoring is a financial tool to accelerate cash flow and not a way to offload your bad-paying customers.

There must be a particular reason why your customer will not pay for an invoice. However, in commercial disputes, you as a vendor will have to respond if your client goes bankrupt or becomes insolvent. We typically credit insure your receivables, which means our credit insurance would cover that loss.

Yes, your company can continue performing accounts receivable maintenance duties on all your accounts, even if you do factoring. Just remember that all payments on your invoices go directly to your factoring company.

Depending on your factoring company, you could have a non-recourse or an entire recourse factoring contract. On a non-recourse factoring contract, the risk and potential loss of a customer defaulting on payment of an invoice typically rely on the factoring company. On full recourse factoring contracts, your company would be responsible for any default or non-payment risk.