Financing to cover the payment period in cooperation with the bank and Finnvera
In business negotiations, the payment period offered can be the decisive factor that finally seals the deal. With the right financing solutions, this does not burden your company’s cash situation or balance sheet. There are many means of buyer financing.
Documentary credit with a payment period
If you use a confirmed documentary credit with a payment period as the payment method, your bank can pay (discount) the documentary credit to your company immediately after the delivery of the goods once you have presented the documents defined in the documentary credit terms and conditions to your bank.
Selling or financing invoice receivables
You can convert your invoice receivables from a foreign buyer into cash either by selling them to your bank or by financing them.
When you sell the invoice receivables to your bank, the credit loss risk associated with the receivables is also transferred to the bank. In this case, the bank can protect the receivables with Finnvera’s receivables purchase guarantee. The guarantee is suitable for continuous export deliveries of raw materials, consumer goods and semi-finished products, for instance, in which the payment period granted to the buyer is typically less than 180 days.
In the financing of invoice receivables, the bank grants your company a loan that corresponds with the receivables (e.g. a factoring arrangement). Your company still carries the credit loss risk associated with the receivables. If you have insured your receivables with Finnvera’s credit risk guarantee, you can transfer your guarantee-based compensation right to your bank and use the guarantee as security for credit.
Bill of exchange
A foreign collection item often entails a bill of exchange (or a series of bills of exchange), separate from the sales contract and accepted by the buyer, that falls due to the buyer after the agreed payment period.
A bill of exchange is suitable for buyer financing in the export of machinery and equipment, for instance. With a bill of exchange guarantee, the bank purchases the bill of exchange from your company and transfers financing-related risks to Finnvera. The guarantee protects the bank in case the buyer does not, for one reason or another, pay the bill of exchange on its due date.