Through cash-in-advance payment services, an exporter can increase sales, profit while avoiding credit risk or the risk of nonpayment from the buyer by using 1st PMF Bancorp.
Since payment is received prior to the transfer of ownership of the goods, the risk is handled in advance and insured in many of these cases through PMF Bancorp. Wire transfers and credit cards are the most commonly used cash-in-advance options. The problem is that requiring payment in advance is the least attractive option for the buyer. After all, this method tends to create cash flow problems. This is where trade financing to expand international sales and credit insurance by PMF Bancorp makes the most sense to both parties. PMF Bancorp has experience financing, factoring, and insuring these types of transactions on both sides of an international transaction, particularly with Chinese factories / exporters and American distributors / buyers.
Without question, there are certain trade situations, particularly on the international level, where cash-in-advance terms just make sense. If the importer is a new customer and/or has a less-established operating history, why take the risk? If the exporter’s product is unique, not available elsewhere, or in heavy demand, cash-in-advance terms can help to guarantee the acquisition. A third reason to focus on cash-in-advance is if the exporter operates an Internet-based business where the use of convenient payment methods is a competitive reality. In all of these cases, PMF Bancorp has experience helping to make a stressful negotiation into a working deal through a variety of trade financing options.
The problem is that when cash-in-advance is demanded without factoring and trade financing, it often is not a competitive option. Without the certainty that a financial institution like PMF Bancorp can offer, if full or significant partial payment is required prior to the transfer of ownership of the goods, the deal can implode on either side. Unless the seller sees no other option or the buyer has no other viable vendors, your company can lose out to competitors who may be willing to offer more attractive payment terms.
In a global market, customers and trading partners can be lost to competitors who offer more favorable payment terms to foreign buyers. Creditworthy foreign buyers, who prefer greater security and better cash utilization, may find cash-in-advance terms unacceptable and abandon the deal. This is where PMF Bancorp has an answer to address the needs on both sides. By providing legitimacy, credit insurance, due diligence, and trade financing, PMF Bancorp calms the waters, allowing smooth sailing and profitable deals to happen. If you want to know more about how PMF Bancorp can help your company with trade financing, please contact us.
