International Factoring for a U.S. Company Selling to Foreign Buyers

J&D Financial will do international factoring for a U.S. company selling to a credit worthy foreign buyer. We do international factoring in the following general manner.

1. International Factoring Fees - International Factoring Fees will vary depending on your yearly sales volume, average invoice size, and credit worthiness of your account debtors. Please see Factoring Fees at our website.


2. Factoring Advance Rates - International factoring advance rates can be as high as 80% of the gross invoice value. For new clients we will either make the advance upon receipt and acceptance of the goods by the foreign buyer or we may make a partial advance, at our discretion, upon shipment (bill of lading) with the balance upon receipt and acceptance of the goods from the foreign buyer. Usually with new clients with no payment histories from their buyers, we will not make any advances until the goods have been received and verified as accepted with no disputes, offsets or deductions by the foreign buyer for the first 3 to 5 contracts. However, if your firm has a verifiable payment history with your foreign buyers (copies of wires or checks) we may decide, at our discretion, on a partial advance at first. To summarize, we will advance funds in the following manner:
   • In view of the fact that you are probably checking the goods, we will advance you in the beginning (with verifiable payment history), at our discretion, 50% less factoring fees, upon receipt of ocean bills of lading and all necessary documents. If you do not have any verifiable payment history with the foreign buyer, no advance will be made, at first, until the goods have been delivered and accepted without disputes, offsets or deductions.
   • Once the goods arrive and are delivered to the buyer and the buyer signs off on our Verification and Acceptance form, we will fund you either the full advance (80%) or in those cases where we have made a partial advance (50%) the balance of the full advance (the 30% of the 80% advance). This verification form asks the buyer to sign and confirm they received the goods without any disputes or offsets. This protects us both in the event the buyer refuses to pay the invoice.
   • The partial funding will only be in effect for the first few test containers and if we have no problems with the quality and/or discrepancies, we will consider funding upon ocean bills of lading and other documents, the full 80% advance less factoring fees.
   • In some situations we may require outside inspection of goods by a third party (such as SGS, www.sgs.com) before the goods are shipped.


3. Consignment of Shipping Documents - Usually most foreign companies buy goods FOB port of shipment. If this is the case, we do international factoring as follows:
   • You will send us all the original documents which include a copy of the purchase order from the buyer (on buyer’s letterhead) ,your invoice to the buyer, ocean bill of lading, packing slips, inspection certificate, if any, directly to J&D Financial.
   • From thereon it is the buyer’s responsibility to process the goods and have it delivered to their warehouse. Your buyer is responsible for paying for all transport charges (ocean or air), custom clearance, etc. If you have other shipping terms we can discuss these arrangements with you.


4. Credit Lines for Buyers and Credit Insurance
   • You may purchase the insurance for your foreign buyers, from a credit insurance company we approve, and make us the beneficiary. We can direct you to a broker in the U.S. that can do this for you if you wish. Initial premiums can cost from $5000 to $10,000 (USD) upfront .The premiums are calculated as a percentage of yearly expected sales and are related to the credit lines outstanding. Premium percentages range from .35% to 1.25 % on the gross value of the factoring invoice.
   • Credit insurance may not be needed in those situations where foreign buyers are paying by confirmed irrevocable letter of credit with acceptable deferred payment terms. Or in those situations where a corporate guaranty has been obtained for the foreign buyer from its US based parent firm that is very credit worthy.


5. Are your export receivables pledged to another Lender? Since J&D is factoring your receivables we have to tell the financing world that we are the purchasers of your export receivables. Your export factoring invoices can not be owned or pledged to any other third party lender.
   • Your receivables must be free and clear before we can factor them. If your foreign export receivables have any loans against them secured by a UCC filing, your present lender must put J&D Financial in a first position on your export receivables before we can factor them
   • Most U.S. based lenders do not loan funds against foreign receivables as part of the overall loan package. J&D Financial can work with your present lender so everyone can benefit from additional working capital loaned you. Your lender must want to cooperate. They should be able to allow J&D to take a first position on your export receivables through what is called an intercreditor agreement. This intercreditor agreement spells out the collateral owned by the various lenders. Usually one lender owns the domestic receivables and the other lender (J&D) owns the export receivables. Ask your lender if they would consider this.