Startups face a variety of challenges every day, so entrepreneurs need to have the right comfort when making decisions.

Having the solutions that best suit your business needs at all times may be the answer.

A good example can be the control of payments and cash management. You already know that, in addition to the search for a sustainable and profitable business model, it is critical to have sufficient cash at all times to avoid preventable inconveniences.

To address this challenge, today we are talking about confirming, a service for managing payments to suppliers, to which the Bank optionally offers non-recourse financing. With this service, the Bank assumes the management of payments to the suppliers of a company (the payer of payments) allowing deferring the payment to its suppliers. The Bank is in charge of managing the payments to the suppliers and offers the beneficiaries an advance payment.

There are two types of confirming that can be useful for your startup, allowing it to adapt to the needs and negotiating capacity that the company has with its suppliers.

The confirming that we call standard or principal, in which the operation has no cost for the supplier if he collects the payment order at maturity. In the case that the advance payment is desired, the part corresponding to the interest plus the commission will be discounted from the nominal amount of the invoice. In this case, a future invoice payment date must be negotiated with the supplier.

But we understand that suppliers do not always accept future payment of their invoices, so there is also the confirming prompt payment, with which you can make cash payment to suppliers of the full amount of invoices and these payments are settled in the current account at a future date, previously agreed with the Bank, which is usually between 60 and 90 days. The corresponding financial cost (commissions and interests) are charged at the moment of transmitting the payment orders to the suppliers.

En ocasiones, la relación comercial con clientes y proveedores puede ser más sofisticada, por ejemplo, cuando las operaciones son internacionales. Por suerte, hoy en día existen diversas fórmulas para ayudar a las startups en su internacionalización. Además, muchas de ellas pueden combinarse en lo que se denominan las líneas de comercio exterior o comex.

International business can present many opportunities for your startup, but also new challenges and concerns in financial management. For this reason, having a financial partner capable of accompanying your startup on this path can be decisive, but it is also important that you know the possibilities of financing international operations, such as payments to suppliers in other countries.

Financing your imports is not complex to apply. If you have a comex financing line, when issuing an international payment by transfer or check, even if you use more sophisticated tools such as remittance or documentary credit, the Bank enables the option of financing this payment in the short term, either in euros or in foreign currency, so as not to penalize the cash flow, thus reducing the impact on the cash for the usual operations, until the sales are made and the payment is received from the customers. This financing makes it possible to comply with foreign payments without sacrificing liquidity, and also makes it possible to obtain better conditions for bank financing than those that would be obtained from a longer deferral of payment by the supplier.

If you decide to finance payments in a currency other than the euro, it is also important to know that exchange rate insurance reduces the uncertainty of the evolution of currencies during the term that the financing is active, since at the time of payment you can insure the exchange rate of the currency for the maturity of the financing, eliminating the possible negative impact, which can result in a higher cost than expected when the evolution of exchange rates is not favorable.

In any case, Banco Sabadell has International Business specialists who can advise you on banking services for the international operations of your startup.

In our next edition we will address another of the key challenges in a startup, talent retention. We will talk about financial services that can help your startup to offer attractive benefits for the people in your team, improving the perception of the company for your collaborators and generating a greater bonding and sense of belonging.