Export Factoring

Unlock the cash tied up in your international sales invoices with our Export Factoring solutions. Export Factoring is a specialised service that helps businesses finance exports and international sales by leveraging a third-party finance organisation in the country where you are doing business. This ensures smooth collections and payments, helping to streamline your export operations.

Features of Export Factoring

You can choose to be paid in local or domestic currency, even if your invoices are issued in AUD.
Protection against currency fluctuations is available, providing greater financial stability.
Export Factoring is often a more cost-effective way to finance international sales compared to conventional export finance options.
Export Factoring tends to be more expensive than domestic factoring, reflecting the added complexities of international transactions.
Credit protection insurance is usually required for Export Factoring, given the heightened risks of international trade.

Financing Exports and International Sales

Not all factoring companies offer Export Factoring, but at Factoring Finance, we work with an independent broker network that includes specialists in Export Factoring. This allows us to find the right solutions for Australian businesses engaged in international trade.

Overcoming International Challenges

Export Factoring helps address challenges posed by foreign customs, legal systems, language differences, and business practices by working with a finance organisation based in the destination country. This third-party involvement ensures smooth payment collections, much like domestic factoring services. Despite the international scope, the process remains seamless, and your business should notice little difference in service.

However, it’s important to note that while up to 90% of invoices can be advanced for Australian Invoice Finance packages, the advance for export invoices may sometimes be lower due to the complexities of international transactions.

Payment Options: Local Currency or Pounds Sterling

With Export Factoring, you can choose to be paid either in the local currency of the country you are trading with or in AUD. If you regularly conduct business in a particular country, it might be worth considering opening a local business bank account to handle currency transactions more efficiently. If you are dealing with significant volumes or large invoices, it’s advisable to seek expert advice on hedging against currency fluctuations to protect your revenue.

Export Factoring Requirements

The requirements for Export Factoring in Australia can differ depending on the destination country, sector, and trade agreements. Here are some general requirements for Export Factoring in Australia:

Export Factoring Requirements for UK

Minimum Turnover: Export Factoring in Australia generally requires a minimum annual turnover, which typically ranges between AUD 1 million and AUD 5 million, depending on the factoring provider and industry sector.
Credit Terms: Australian Export Factoring providers generally require that your business operates on B2B credit terms, with trade credit periods ranging from 30 to 90 days.
Export Region Considerations: Export Factoring is more easily available for certain countries, especially where Australia has trade agreements or strong economic ties. Export Factoring for countries outside key trading partners may involve stricter criteria.
Sales Volume: While some providers may work with SMEs, larger factoring facilities (above AUD 5 million) may require a significant volume of sales to specific countries, especially those with higher risk profiles.
Insurance Requirements: Many Australian Export Factoring providers require businesses to have credit insurance to mitigate the risks of non-payment by foreign buyers, particularly when dealing with unfamiliar markets.
Local and Foreign Currency: In Australia, you can choose to be paid in AUD, USD, or the local currency of the country you're exporting to. Factoring fees may vary based on currency hedging requirements to manage exchange rate fluctuations.
Legal and Regulatory Compliance: Australian Export Factoring providers require compliance with both local and international trade laws. Businesses must ensure invoices are legally transferable and meet the requirements of both Australia and the destination country.

Key Differences Between Export Factoring in Australia and Other Regions:

Regulatory Differences: Australia's trade and finance regulations differ from those in other regions, such as the EU or the UK. Additional compliance checks are often required to ensure local and international trade laws are met.
Currency and Hedging: Given Australia's significant role in international trade, currency hedging can be a critical element in managing foreign exchange risks in Export Factoring transactions.
Trade Ties: Export Factoring in Australia tends to be more straightforward when trading with key partners such as China, Japan, the US, and the ASEAN region, where strong economic ties and trade agreements are in place.