NedLiberate enhances exporters' cash flow

NOT ONLY is it important for export manufacturers and producers to receive payment for their goods, they should also be able to access cheap offshore funding against invoices in order to enhance their cash flow.
Nedbank offers its clients exactly that.
Its factoring and invoice
discounting product, NedLiberate, offers local exporters peace of mind when dealing with international importers, says Nedbank's Dennis Turner. Its on-line computer link to the foremost international factoring network, FCI, ensures that clients' trade transactions are efficiently settled. It also allows clients to make advances at cheaper international rates than those available locally.
The network, initiated in 1968, is well established, has the largest share of the world market in terms of volume, and represents the interests of independent factoring companies around the world.
As a member of FCI Nedbank can guarantee that its clients will receive payment for their exports. With members in over 50 countries, the network ensures our correspondent has access to the international company's financial statements. This allows them to determine the creditworthiness of the company and set a credit limit, thus minimising the risk of payment delays. Clients have also experienced problems with lengthy and expensive letters of credit as they were often refused by international banks.
Exporters use factoring companies to settle trade transactions on their behalf. Factoring gives exporters the benefits of consistent cash flow, lower administration costs, reduced credit risks and more time to concentrate on their main areas of business, says Turner.
Selling in the international market presents unique challenges - foreign customs, currency systems, laws and languages can create barriers to trade. The factor will eliminate these problems by approaching the importers in their own country, in their own language, in the locally accepted manner and will negotiate with their own bank, according to Turner.
One of the greatest problems facing exporters is the increasing insistence by importers that trade be conducted on open account terms. This could lead to the exporter only receiving payment weeks or even months after delivery. This causes companies to experience severe cash flow problems. These problems can be eliminated if the exporter makes use of a factoring house linked to an international factoring network.
Nedbank understands how cash flow problems can hinder businesses. Our products allow clients to borrow 80% of the total invoice amount. An added advantage is that the loan can be provided against South African banking rates or against much cheaper international rates. This eliminates exchange rate risks and provides them with a cheaper means of debtor financing.
As payment instruments, letters of credit have increasingly lost their appeal, particularly in the East. As their role diminishes, international factoring networks are becoming vital in securing payment.
Nedbank's link to the international factoring network has several advantages for local companies with foreign debtors, says Turner. Nedbank has access to shared information on the creditworthiness of debtors. There is also no need to take out debtor insurance as Nedbank removes the foreign credit risk through its agreements with import factor houses in foreign countries. Nedbank clients can pay interest at foreign rates for the borrowing period and NedLiberate operates on open account terms to debtors.