Clothing And Textile Foreign Trade: Export Enterprises Take Measures To Solve The Problem Of Export Financing Difficulties

With the formation of buyer's market in the world, China

In order to win a more advantageous position in the fierce competition, the export enterprises usually provide the buyers with more favorable payment terms, that is, the credit settlement method after the first delivery and receivables, which leads to the gradual expansion of the payment mode of credit sale and acceptance documents.

The popularity of credit sale makes China's foreign trade enterprises bear greater financial pressure while improving their competitiveness in the international market.

How can enterprises find suitable financing methods according to their own characteristics?

At present, in China's foreign trade, the proportion of traditional letter of credit settlement has dropped to less than 20%, while the proportion of credit sales has risen to more than 70%.

In order to ease the financial pressure brought by credit sales to enterprises, foreign trade export enterprises can make full use of the abundant financing products provided by commercial banks and combine their own characteristics to make the most favorable choice for themselves.

Summarize the current bank financing products applicable to credit sale, mainly including the following: liquidity loan, export order financing, export TT negotiation, credit guarantee financing and international factoring.

Five major financing products for enterprises to "hematopoiesis"

Liquid capital loan: this kind of financial product is the loan issued by the bank to meet the short-term capital needs of the enterprise in the course of production and operation and ensure the normal production and operation activities of the enterprise.

Its main advantages are: the wide use of loan funds; the main disadvantages are: high access threshold, high financing cost, and complex and long process of examination and approval.

Export order financing, export TT bills, credit guarantee sub financing and international factoring business belong to the scope of bank's trade financing business. Comparatively speaking, trade financing has more advantages than ordinary liquidity loans from bank access threshold, convenience and speed of approval process, especially in terms of bank access threshold. Banks provide trade financing credit, focusing on the trade background authenticity and the historical credit status of the import and export enterprises, and generally do not apply the traditional credit evaluation system to investigate the scale, net assets, debt ratio, profitability and security mode of the import and export enterprises, which can effectively solve the problem that some trading enterprises can not obtain liquidity loans because of some financial indicators failing to meet the standards.

When choosing foreign trade financing products for foreign trade enterprises, foreign trade enterprises should pay attention to analyzing their different characteristics.

Export order financing: this kind of financial product is in the international trade which adopts the non letter of credit settlement method, the bank relies on the effective trade order which the export enterprise provides, and takes the anticipated receipts under the order as the first repayment source, provides the international trade financing business which the export enterprise provides for the raw material procurement, the organization production, the cargo pportation and so on funds before the goods export.

Through this mode of obtaining financing funds, it is necessary for export enterprises to obtain trade financing and credit lines in banks.

Export TT Bill: also known as

In the international trade of foreign exchange remittance settlement, the bank, based on the application of export enterprises, provides financing for export enterprises after fulfilling the conditions of full guarantee or in the credit limit of enterprises.

Through this mode of obtaining financing funds, export enterprises also need to obtain trade financing and credit lines at banks.

Financing under Credit Guarantee: refers to the financing provided by the bank in accordance with the export enterprise's application, and after the export of goods, the export insurance company pfers to the bank China Export and Credit Insurance Corp (hereinafter referred to as CITIC insurance) policy reparations rights and interests.

Through this mode of obtaining financing funds, export enterprises need to buy CITIC insurance before the bank pacts business, and pfer the compensation rights and interests of insurance to the bank. The bank will use the compensation rights and interests as an effective guarantee mode to provide trade financing and credit and provide financing for enterprises.

Because CITIC insurance is purchased, the export enterprises can get the buyer's credit risk guarantee service provided by CITIC while obtaining bank financing. However, it is important to note that the highest proportion of the bad debt guarantee can only reach 90% of CITIC guarantee, and the highest proportion of bank credit can only reach 90%.

International Factoring: it points out that when importers sell goods to importers by credit methods such as credit sale, acceptance and documentary payment, the comprehensive financial services such as accounts receivable collection, sales account management, credit risk insurance and financing under factoring are jointly provided by export factoring companies and import factoring companies (if any) based on accounts receivable pfer.

At present, most factoring companies in China are commercial banks. The key point of such trade financing products is the pfer of accounts receivable claims. Banks are based on the pferred creditor's rights to provide a series of services for export enterprises.

According to the number of factoring providers, international factoring is divided into single factoring and double factoring. According to whether the factoring providers provide financing, they are divided into financing and non financing factoring. According to whether factoring providers provide bad debt guarantee services, they are divided into buyout (non recourse) and non buyout (recourse) factoring.

Here, we focus on buyout financing dual factoring and non buyout financing single factoring.

Although the creditor's rights have been pferred to the factoring company (bank) during the financing process, when the accounts receivable fails to be recovered on time, the banks have the right of recourse for the financing they have issued, and they have the right to seek financing from the export enterprises. Therefore, the premise of this financing mode is that the export enterprises obtain the trade financing credit line in the bank, while in the buyout financing double factoring business, the bank can provide 100% of the importer's credit risk guarantee after obtaining the pfer creditor's right of accounts receivable. When the accounts receivable cannot be recovered, the bank will not only bear the risk of this bad debt, but also has the right to seek the export enterprises for the already issued financing. Non buyout financing single factoring is similar in nature to export TT bills and accounts receivable.

The biggest advantage of obtaining financing funds through this mode is that the exporters do not need to obtain any credit lines in the bank.

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Financing strategy of textile and garment export enterprises

Scenario 1:

Multi pronged access to financing

Applicable to the types of foreign trade enterprises: Large Group subordinates, industrial production enterprises and foreign-funded enterprises.

Because such enterprises have better financial conditions, stable customer sources, stable operation and income, they are more likely to get bank credit lines. Therefore, the above ways can be tried to obtain financing options.

Such enterprises can apply to the bank for a certain scale of loan amount on the basis of liquidity, then apply to the bank for trade financing quota, and combine their own trade mode characteristics, choose their own trade financing products, and obtain financing through multiple channels.

For listed companies that have the need to optimize their financial structure, they can pfer accounts receivable claims to some banks, and take out buyout financing double factoring business, because claims are non recourse pfers, so when export enterprises obtain bank financing, they can directly charge accounts.

Loan: bank deposit (received financing) / extra business expenses / other receivables (sales discount and discount expected to be sold) / bad debt preparation (bad debt preparation for receivable claims in factoring business) / financial cost (payment factoring fee), loan: accounts receivable / extra business income, so as to achieve the purpose of improving financial statements.

Option two:

Financing under credit guarantee

Non recourse export dual factoring financing

Applicable to foreign trade enterprises: commercial circulation and small and medium sized foreign trade enterprises.

Because of the small scale of such enterprises, their financial indicators are difficult to reach the entry threshold of commercial banks' liquidity loan and even difficult to obtain trade financing and credit. Therefore, many enterprises often pay high cost in providing effective collateral or seeking effective guarantee in order to obtain bank credit financing.

In order to solve this problem effectively, it is suggested that such foreign export enterprises try to choose financing under credit guarantee and non recourse export dual factoring financing, which does not need to occupy enterprise credit trade financing products.

　　從兩種貿易融資產(chǎn)品可為企業(yè)提供的服務來講，兩者均可在提供融資的同時，提供進口商資信調查和評估以及壞賬擔保;兩者的不同點在于無追索權出口雙保理的壞賬擔保比例最高可達到100%，而中信保最高只能達到90%;在出現(xiàn)壞賬時，無追索權出口雙保理的賠償期限為90天，而中信保的賠償期限通常要120~180天;無追索權出口雙保理可提供銷售分戶賬管理和賬款催收服務，而信保融資項下則沒有此類服務;辦理無追索權出口雙保理的前提條件是，提供出口保理的銀行(出口保理商)要給予提供進口保理的銀行(進口保理商)授信額度，同時進口保理商要給進口商核定一個買方信用額度;辦理信保融資的前提條件時，出口企業(yè)需要購買中信保的出口信用保險。

Therefore, the export enterprises should combine the trade characteristics of their products and regions, and try to use the non recourse export double factoring to obtain more professional accounting management and collection services for the countries and regions where the economy is relatively developed and the country has low risks. For the business of countries and regions which are exported to some countries with relatively high risk, the factoring service of the banks is often unable to cover. At this time, the credit guarantee financing should be chosen.

Of course, in the choice of bank products, there is another important factor to consider is cost cost, textile.

Foreign trade enterprises should choose their own financing products on the basis of cost comparison: from the financing cost, the two products belong to the scope of banking trade financing, and apply the same pricing method, and the cost is the same. But in terms of the cost of handling charges, the non recourse export double factoring is quoted by a single buyer and quota, and the general cost will not exceed 1.5%. CITIC insurance is generally quoted according to the annual insurance amount and the buyer's location and so on, generally 1%~3%, but many local governments will formulate different subsidy policies for the insurance premium, and the exporters should calculate and compare the cost cost of the banking products on the basis of considering the subsidy.

Through the above analysis of the financing mode of credit sale, we can see that for foreign export enterprises who want to increase their competitiveness in international trade and increase their turnover through credit sale, there are many financing models to solve the problem of credit financing. When choosing, they should try to use them in accordance with low cost, no credit, trade financing products, and loan of liquidity.

On the other hand, it is a passive choice for enterprises to use credit sale settlement to exchange orders. After that, foreign trade export should accelerate pformation and upgrading, continuously improve the quality, added value and technology content of export products. On the basis of giving play to traditional competitive advantages, we should continuously innovate and cultivate new competitive advantages and enhance the core competitiveness of enterprises, so that we can get more advantageous bargaining position in trade negotiations and get more favorable settlement methods for export enterprises, which is the best choice.