When exporting goods to buyers overseas, suppliers typically wait 30 - 120 days for payment. Such ‘deferred payment’ is normal in international trade but it ties up capital and can have a crippling effect on cash flow and business growth.
Invoice financing (also known as ‘invoice factoring’) provides the exporter with immediate payment of that debt – by transferring money to the supplier as soon as the goods are shipped and collecting money later from the buyer. In this way, the supplier gets the cash without delay and is protected against non-payment.
Read more about invoice financing here.
Stenn offers ‘reverse factoring’ to assist buyers. In this scenario, a buyer can ask a supplier to apply for financing on a transaction they are negotiating. This will mean that the supplier is paid when goods are shipped on an invoice which the buyer will not have to settle until, perhaps, 90, 120 or even 180 days later.
There are several possible advantages for the buyer in this:
- Scenario 1: The supplier and buyer already trade on a ‘deferred payment’ basis, but the buyer is able to obtain much better prices from the supplier if the invoice can be settled when goods are shipped.
- Scenario 2: The supplier and buyer already trade on a ‘payment upon shipment’ basis, but the buyer would prefer to move to ‘deferred payments’ to ease its cash flow and benefit from the goods before payment. However, the supplier is unwilling to tie up its working capital for months and take on the risk of non-payment.
- Scenario 3: The buyer would like to make a first purchase from a new supplier, but the supplier will not agree to deferred payments because of the risk of non-payment with an unknown buyer. The supplier wants to be paid when goods are shipped.
In each of these scenarios, reverse factoring eases cash flow for both parties, eliminates the risk of non-payment and enables new trade deals to be approached with confidence in competitive international markets.
Find out more in this video from Stenn’s Global Head of Credit.
Buyers/importers seeking to finance turnover must demonstrate good credit standing through profitability, positive equity and a reasonable balance. They will need to meet criteria based on the following two scenarios:
Case 1: US-based companies looking for financing up to $500k (USD) will need to have been in business for at least 12 months and have an annual sales turnover of at least $500k (USD). We cannot support companies that have filed, or are in the process of filing, for bankruptcy in the past two years.
Case 2: A Euro-based or North American company looking for finance up to $10 million (USD) will need to have been in business for at least 12 months and have an annual sales turnover of at least $3 million (USD).
We cannot support companies that have filed for insolvency in the past two years.
Stenn can finance invoices for a wide range of consumer or professional goods, such as: apparel, automotive parts, electronics, finished goods, food products and ingredients, machinery, equipment, metals, packaging, etc. We can also finance professional services such as software development and consultancy.
Stenn cannot finance invoices connected with oil, gas or coal; conflict minerals; sanctioned goods; weapons and firearms; precious metals.
Your supplier will be an exporter in a country free of sanctions, cannot be one of your affiliated companies or have been forced into bankruptcy.
Faster than a bank, better than a loan
Stenn’s online invoice financing is much faster than a bank (assessment is quick and funds are paid within 48 hours of only two documents being signed) and is better than a loan (it has no influence on credit history, needs no collateral, and requires no lengthy applications and interviews).
Higher funding limits
It also offers a much higher limit than bank credit typically would - up to $10 million (USD) per buyer - and covers you against the risk of your buyer failing to pay your invoice.
Provides huge leverage
It can also give smaller companies tremendous leverage. For example, a company with assets of only $50 000 (USD) could finance a shipment of goods worth $500 000 (USD) if the buyer fits the criteria.
It will provide funding where banks often won’t
Finally, Stenn specializes in financing cross-border trade. Very often banks do not finance international deals because they don’t work in jurisdictions other than their home countries.
Read more about invoice financing here.