There is something of a cliché in the business world and when a once-thriving small business starts to experience problems, the general phrase used is that they “grew to quick”. In short, this means that they were unable to cope with the soaring demands that their once-tiny enterprises weren’t used to facing. One of these, is international trading.
Unsurprisingly, taking your business overseas is certainly no small feat. It’s stressful, financially draining and it can have huge repercussions for the rest of your business in the extreme cases.
One of the biggest problems that companies face is dealing with foreign firms. Some get lucky and will only deal with the most reputable out there, but others will come across shady establishments that could potentially ruin their business. Whether it’s defaulting on bills, simply paying them late or just incurring costs by chasing them all the time – it’s all unnecessary hassle. Especially, when international factoring services are now on the scene.
In simple terms, this is a type of firm that will buy invoices from a company and take care of payment collection. Naturally, they will take a commission, but here’s why they are absolute godsends for those business owners that were once terrified of venturing out of the country…
First and foremost, they offer that elusive protection. Once you’ve netted that lucrative contract abroad, a lot of the time the deal has only just begun. Chasing payments across the pond is no easy feat and is a huge drain on resources. As such, handing over such responsibility to a third party relieves a huge amount of pressure and immediately takes the risk out of the international deal.
Sustained Cash Flow
Let’s also not forget the other key benefit; a sustained cash flow. Any business owner will have stumbled across this issue at least once through their career, whether they have been trading internationally or domestically. While you may have paid for your products, getting your own customers to meet their end of the bargain is much easier than you first imagined.
Naturally, the problems are multiplied when you venture abroad. However, with that third party factoring service again taking the risk out of all of your transactions, it means that you won’t have to deal with all of the excuses from Customer A and Customer B, with your third party contact making regular payments on an agreed basis. Most of the time, this is regardless of whether or not the customer has paid – so it’s an absolutely huge benefit.
Pass On Benefits to Customers
As you can see, the two advantages we’ve touched upon are gigantic for any business – let alone one that is dipping their toe in international territory. Something that a lot of people forget is that when a business does have risks, these are usually passed onto the final customer. As such, with the risk being completely extracted because of the factoring agent, it means that customers can be provided with better deals which can naturally boost business anyway.