1st Commercial Credit Extends Trade Finance to China

US-based factoring company 1st Commercial Credit, which provides accounts receivable (AR) financing in the US, Canada and the UK, said that it now provides receivable factoring and purchase order financing for Chinese based companies selling to major global markets.

Austin, Texas-based 1st Commercial added that the services provide fast payment terms to suppliers eliminating the use of Letters of Credit (LCs).

“This unique service is in high demand, as Chinese suppliers need to factor receivables due to cash flow shortages they encounter due to slow payments,” said the company.

“LCs are the usual forms of payment but are getting antiquated in the new international business world (and) are usually stuffed with too many obstacles and loopholes that make collecting proceeds a hardship for the recipient. It is much easier to use 1st Commercial Credit’s factoring services and sell on credit terms than hassling with foreign banks trying to collect money on goods sold.

“The purchase order financial product is seamless as no LCs are issued to suppliers. Proceeds are wired once the order has been verified so the suppliers really enjoy this type of service. This is a relatively unique process as most purchase order finance companies do not wire funds to China, they will only provide LCs on behalf of their customer.”

According to 1st Commercial, this also benefits US-based companies with money tied up with open LCs to Chinese suppliers. “Companies must outweigh the transaction fee if they are turning away sales in high peak seasons due to lack of cash flow,” it added. “Ultimately, the fees must be compared using all financial alternatives available and see if the cost will justify losing out on sales and growth.”

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