International Invoice Factoring
Typically, options for invoice finance, such as factoring and invoice discounting, are often considered by businesses trading within the United Kingdom; however, there are some factoring companies that also offer the opportunity for ‘export factoring’, the financing of goods or services that are sold overseas. In terms of the process and credit limits, local and international factoring are generally the same, although factors may offer a lower percentage rate on invoices for international sales than they do for domestic sales.
Basic Requirements
Normally, companies must have a minimum turnover of £100,000 and this can include the value of UK sales. Within the European Union (EU), businesses are able to factor amounts owed from other parts of the EU, even if these are relatively small. Outside the EU, businesses will need more substantial sales per country and for the USA; for example, annual sales of at least £500,000 are often required.
How it Works
In the UK, a lender or factor will normally be directly involved in arranging invoice finance with a business. Export factoring, however, usually requires a further partnership and the lender works with a local agent who will take on the responsibility for collecting payments in the country to which the business is exporting. This mechanism serves to help prevent any difficulties that might arise as a result of, for example, time or language differences or variations in laws and customs. It is often possible for businesses to invoice in one specific currency and choose to be paid in another.