Export finance

Why exporters run short of cash

Winning an export order is exciting. Funding it can be hard. Consider the timeline: you buy materials and pay staff to produce the order, which might take weeks. Goods ship by sea, which takes more weeks. Then the buyer’s payment terms start, which might be 30, 60 or 90 days after delivery. Add it up and you can be waiting several months for money you spent at the start.

For a growing exporter, every new order deepens that hole. Export finance is designed to fill it.

Two kinds of export finance

Type	When it’s used	What it funds
Pre-shipment	Before the goods ship	Materials, labour, packaging, freight booking
Post-shipment	After the goods ship	An advance against the export invoice

Many exporters use both: pre-shipment funding to produce the order and post-shipment funding to bridge the buyer’s payment terms.

What do export funders look at?

• The buyer: who they are, where they’re based and their payment history.
• The contract: what’s been agreed, including terms, currency and delivery conditions.
• Your track record: how long you’ve exported and how past orders went.
• Your margins: whether the order is profitable after finance costs.
• Currency risk: how you’ll manage exchange rate movements.

Managing the risks

Export brings risks that domestic trade doesn’t: currency movements, longer shipping times, foreign legal systems and the challenge of chasing overseas debts. Consider talking to your bank or adviser about currency hedging and credit insurance, and look into the support Austrade and Export Finance Australia provide to exporters.

Export finance and its neighbours

• Invoice finance works similarly for domestic invoices.
• Purchase order finance suits fulfilling a large confirmed order.
• Contract funding covers the cost of mobilising for a major new contract.
• Business expansion loans fund the broader push into new markets.

Run through the loan matcher to compare, or describe your export order for a direct view.

An illustrative example

A South Australian food producer wins an order from a retailer in Asia. Pre-shipment funding covers ingredients, packaging and extra shifts; once the container ships, post-shipment funding advances most of the invoice while the buyer pays on 60-day terms. (Illustrative only.)

What else is export finance called?

Lenders, accountants and search engines don’t all use the same words. You’ll also see this entry described as Export loan and Export working capital. In our A–Z index every one of those names points back to this page, so whichever term you searched, you’ve landed on the same thing. If a lender uses a name you don’t recognise, ask them to describe how the security, the term and the repayments work; that tells you far more than the label.

Where does it sit in the directory?

This entry lives on the trade, stock and asset shelf. It’s most often used for stock, trade and invoices, buying, starting or growing a business, and the security usually involved is invoices, stock or orders. It usually involves a little more paperwork and assessment than the quickest options, so start early. Its closest neighbours are:

• Purchase order finance — Fund the supplier so you can say yes to an order bigger than your bank balance.
• Trade finance — Pay suppliers now and repay once the goods have sold.
• Import finance — Pay overseas suppliers, freight and duty before the container lands.
• Inventory finance — Borrow to buy stock, with the stock itself part of the picture.

To compare all of them at once, filter the Loan Finder by purpose and security.

Common mistakes to avoid

• Assuming every invoice qualifies. Funders exclude disputed, overdue, related-party and some progress-claim invoices, so check eligibility early.
• Overlooking concentration limits. If one customer makes up most of your sales, the available funding may be lower than expected.
• Not reading the minimum term. Some facilities have notice periods and minimum fees that matter if your needs change.
• Using it to mask thin margins. Trade and receivables funding works best when each transaction is profitable after finance costs.
• Poor record-keeping. Clean, up-to-date ledgers and stock records make approval smoother and limits higher.

What should I ask before signing up for export finance?

A short list of questions saves a lot of regret. Put these to any lender or specialist before you commit:

1. What percentage is advanced? The advance rate on eligible invoices or stock decides how much cash you actually receive.
2. Which items are excluded? Know the eligibility rules for overdue, disputed and concentrated debts or stock.
3. How are fees charged? Discount charges, service fees and minimums can be structured very differently.
4. Is the facility confidential? Decide whether you’re comfortable with customers knowing a funder is involved.
5. What’s the minimum term and notice period? Exit terms matter if your business changes direction.

If an answer is vague, ask again or ask for it in writing. Good lenders are happy to explain their terms clearly.

Say yes to the export order

If an overseas order is bigger than your bank balance, export finance can help you fulfil it without starving the rest of the business. Enquiring takes about a minute and there’s no credit check. One specialist handles it, rather than your details being sent out to every funder at once.

Please tell us about the buyer, the order size, the terms and your export history. Precise details mean the right structure first time. Start your enquiry.