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Financing Imported Machinery

Financing imported machinery can be quite a complex issue. Often the supplier will requiring paying up front however the finance company is loathed to release payment before the equipment is delivered to the customers premises.

More often than not a common sense approach can be reached whereby an amount equal to deposit is paid across to the supplier to provide some commitment. Providing the supplier is provided with some form of evidence that a hire purchase or finance lease facility has been agreed this is usually enough to get the machinery on its way. Most UK finance companies will release payment tothe supplier on evidence that the machinery is on UK soil .

To protect the customer a small retention of 10-20% of the net cost of the godds can be withheld until satisfactory installation. If the supplier is unwilling to release the machinery or equipment prior to shipment before receiving payment in full it was once possible for a funder to provide a  pre facility loan or overdraft.

For obvious reasons the customer would need to be pretty strong in terms of their financial standing. These facilities were more often than not offered  by bank owned finance companies however in the current era of restricted credit most of these facilities have been withdrawn. However not to say a bank might not provide an overdraft facility for some of their better customers.

If none of these are an option  it may be possible to arrange a letter of credit.  This is basically  a bank backed guarantee stipulating that providing certain conditions are fulfilled payment to the supplier is guaranteed. XL Business Finance has experience and expertise at negotiating with foreign supppliers and ensuring the correct wording and documentation is provided to enable the quick release of funds and at the same time providing protection for the customer and comfort the supplier.

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