Overview
The Export Commercial Invoice Financing is a type of short-term trade finance where customers sell the export receivables under the export commercial invoice to ABC; it is done for a certain percentage of the invoice value, provided that customers have shipped the goods or rendered the services in accordance with relevant contract on credit terms and are to be paid by remittance.
Features
1. Customers get money before the importers make a payment, which speeds up the funds turnover.
2. The procedures are much simpler compared with working capital loans.
3. It can increase cash inflow of the current period in order to improve the financial standing and capacity in financing of customers.
4. Customers will have access to receivables management service provided by ABC, along with relief from the work of receivables management.
5. Customers are able to sell their foreign exchange earlier to hedge against the risk of foreign exchange rate.
Procedures
1. The customer submits (a) the Application for Export Commercial Invoice Financing, (b) the export contract, (c) the original commercial invoice with clause of creditor's right transfer (if such clause not present, the Cover Letter of Receivables Transfer signed and sealed by the customer), (d) the profile of the importer under the application for Export Commercial Invoice Financing, (e) in the case of special goods subject to state control, the license or permit for export, and (f) the original bill of lading and other documents as provided in the import and export contract (if original bill of lading is not available, the copies of the transport documents and the original export declaration, or the Customs declaration information retrieved from the Verification System for Receiving and Selling of Foreign Exchange for Export shall be provided).
2. ABC reviews the application, determines the amount of financing and signs the Contract for Export Commercial Invoice Financing.
3. The proceeds under Export Commercial Invoice Financing shall be repaid to ABC after payment from the importer is received.
Tips
1. The price of the export goods shall remain stable. In the case of goods included in the list of controlled goods for export, relevant permit or license shall be provided.
2. The export contract shall not contain clauses that the importer and the exporter may offset their receivables or payables, the obligations may be performed by a third party, or the receivables transfer is prohibited, which may affect the reception of payment.
3. The financing date under application shall not be later than the payment date of the invoice.
4. Customers shall indicate on the commercial invoice or the cover letter that the receivables have been transferred to ABC.
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