In order to succeed during the downturn, an increasing number of UK companies with a competitive product or service are seeking to expand into international markets and take advantage of favourable exchange rates.
Figures from the Asset Based Finance Association have revealed that export invoice discounting rose by seven per cent during the first quarter of 2009, as more firms look overseas for new growth opportunities.
However, taking the first step towards exporting can be daunting, even for established companies. Those wishing to target new territories should conduct extensive market research, utilise available guidance and seek appropriate finance.
In order for firms to manage the life cycle of international transactions, an adequate level of working capital is essential. Many businesses operating abroad find that their cash flow can be restricted due to sourcing raw materials from overseas and working with suppliers who operate on a pre-payment basis.
In addition, the length of time between goods being shipped and the receipt of payments from customers can take weeks or even months – a gap that can be bridged by asset based lending (ABL).
ABL advances cash by leveraging the value of existing assets such as sales ledgers and machinery, releasing the funds needed to support expansion.
This form of funding allows management teams to unlock the hidden value of the company’s assets in order to effectively capitalise on overseas demand.