Question

Describe the range of options that would be available to a small beef producer needing to raise export working capital to

market to overseas distributors ?

Answer 1

Since it is a small-scale business wanting to expand through exports, there will not be a huge amount of funds lying idle with the business person. Hence the following sources of working capital seem feasible in this case:

• Short-term loans - Since this is an industry where the rates of turnover of the capital is not very long, an initial short-term loan can be a great way to kick start proceedings.

• Trade Credit - A great solution is to take or ask for trade credit, that is, he/she buys time to pay after a certain period of time by which there is a high probability that the importer will have paid the money due under the consideration.

• Discounting Bills of Exchange - If the producer receives bills of exchange payable after a certain period of time and he/she needs the funds immediately, then going to the banks to get the bills of exchange discounted could be a great option. Although a part of the actual amount to be received at the due date is not received as the bank will charge a certain amount as their fees, but it is an instant source of receipt.