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Advantages of Working
Capital Management
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Trade finance is an important part of the business. It offers various aspects of
managing finances for the company. Trade finance helps to generate, manage and
establish various finance practices like working capital, factoring solutions,
banking solutions, loans, guarantees, discounting, etc.
Various trade finance companies help to provide credit finance, export finance,
credit protection, invoice collection services, etc. Trade finance companies help to
reduce marketing cost and increase your trade profitability. They also help in
increasing the sales by promoting the products, services or the website around the
world. Trade finance companies also help in broadcasting the trade leads, generate
new business and promote the company to new business groups or business
ventures. Trade finance companies help in eliminating most of the commercial and
political risk normally retained by the company or any small or medium business
owner. These trade finance companies also provide 100% financing solutions.
Some of these companies or agencies are factoring agencies also that help in
facilitating international trade through factoring and other related trade finance
techniques.
Export oriented trade finance companies provide finance support system for
enhancing cash flow, reducing finance costs. Export trade finance companies or
agencies also provide information and support for export working capital, Export
Import Banks, financing, loans, loan forms, guarantees and forfaiting. It is
important to know about some of the export trade financing companies, agencies,
or financial institutions like AFIA, Export Express, Factors chain international, etc.
Some agencies with their special trade finance programs and techniques help small
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and medium business owners to find needed capital to succeed. They also help in
pre-order financing of labor, materials, goods, machinery, financing of receivables,
issuing letters of credit, etc.
Apart from companies and agencies there are several government organizations
that assist companies with their export venture. These federal governmental
organizations offer services that range from export loan guarantees to loan
assistance. They also serve as specialized associations that offer advice and
counsel to interested small and medium business owners. Moreover, they also
organize and provide seminars, lectures, convocations and publications on topical
areas of trade finance techniques. They also server as a medium to exchange
information between organizations, companies, agencies, that indulge in trade
finance. Professional trade finance companies and institutions seek to promote
good and moral trade practices amongst the trading parties.
Trade financing be it for the local market or the international market for exports,
begins from the first stop at the banks. It is important to identify the source that
provide trade finance or risk mitigation. Factoring, forfaiting, loans, bank
guarantees, letters of credit, export financing are various trade finance practices.
Factoring allows the business owner to calculate the present value of future amount
due or sale of a firm accounts receivable to a financial institution known as a
factor. Invoice factoring helps the small and medium business owners to obtain
immediate cash required for business without owning and debt or transferring
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business equity. These business owners sell their invoices in order to receive
money today.
Forfaiting is a practice of trade finance, which is used as an alternative to the
export credit or insurance cover. It allows exporters to obtain cash and eliminate
their risks by selling their receivables on a 'without recourse' basis. These trade
finance practice act as resources of fund management, credit management, loan
elimination and increasing profitability by cutting administration and marketing
costs along with the overheads.
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