Manufacturers of capital goods face a high level of competition on the international stage. And this contest mainly takes place in the area of terms of payment.
Owing to their lack of capital market structures, emerging markets are endeavouring to pass on their financing burden. As a result, German exporters can only leverage the local potential if they confront this issue and involve a suitable banking partner.
Receivables financing in particular (forfaiting) is highly important in balance sheet optimisation through active working capital management. Furthermore, accompanying financing – such as pre-export, pre-payment or financing of raw materials – cannot be forgotten as they relate to the performance of the respective export business.
Using a tailored financing concept the exporter can facilitate the acquisition of orders and ensure a successful contract settlement.
Types of financing
The most common forms of finance for export trade are forfaiting or buyer's credit.
Master agreements have been concluded for buyer’s credits tied to specific deliveries to allow fast and smooth handling of financing.
Attractive payment conditions are usually just as important in competition as the quality and price of your product. You can represent this value added with buyer's credit. Financing costs are relatively low and your customer's local credit line is not affected.
The buyer's credit is a direct loan to your customer abroad to finance the purchase of capital goods and assets.
You sell goods abroad and arrange an advance payment of at least 15% of the invoice amount with your customer in the supply agreement. LBBW provides your customer with a loan for the remaining 85% of the purchase price. This loan is paid out directly to you.
You have no foreign risk and improve your balance sheet as payment is received on delivery. For you as an exporter the finance is a cash paid transaction.
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