Posts Tagged ‘trade finance guide’

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NEI/NEXT Priority Objective: Expand Access to Finance for U.S. Exporters

July 10, 2014

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Yuki Fujiyama is a trade finance specialist with the Office of Finance and Insurance Services Industries in the International Trade Administration.  He serves on the Department’s liaison team to the U.S. Export-Import Bank and he is the author of The Trade Finance Guide: A Quick Reference for U.S. Exporters.

Attendees at the Seminar learned the best ways to get paid from export sales, as part of a continued effort to support U.S. exporters.

Attendees at the Seminar learned the best ways to get paid from export sales, as part of a continued effort to support U.S. exporters. You can learn about this in our Trade Finance Guide.

The U.S. government is focusing on expanding access to finance for U.S. exporters, especially for small and medium-sized enterprises (SMEs), and their foreign buyers.

On June 30, the U.S. Department of Commerce partnered with a number of local organizations and federal agencies to present The Global Connect: Arlington Trade Finance Seminar at Arlington Economic Development in Northern Virginia.

Expanding access to export financing is one of the five priority objectives under NEI/NEXT, the next phase of the President’s National Export Initiative, a customer-focused initiative to ensure that more American businesses can fully capitalize on markets around the world.

Despite recent improvements in the economy, many U.S. businesses, especially SMEs and minority-owned firms, still face significant challenges in financing their export transactions.  The Arlington seminar helped local SMEs learn ways to overcome such challenges by following NEI/NEXT’s three key trade finance strategies:

  1. Engage and educate more commercial lenders and private-sector partners on U.S. government export financing and insurance programs.
  2. Educate more U.S. businesses on how to utilize the government and commercial trade finance resources that can help turn their export opportunities into actual transactions.
  3. Streamline services provided by U.S. government export financing and promotion agencies.

In addition to these finance strategies, participants also explored:

  • getting paid from export sales;
  • getting paid in foreign currencies;
  • taking advantage of  export assistance resources and U.S. Government export financing programs;
  • identifying U.S. export opportunities in Latin America; and,
  • finding global business development resources for U.S. Hispanic and Other Minority-Owned Businesses.

With the new knowledge gained from Global Connect Arlington, participants are now more equipped to enter, grow and succeed in global markets!

Do you need more info on trade finance? Our Trade Finance Guide is a great place to start!

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Cash Flow Strategies to Make Your Exports More Competitive

May 13, 2014

This post contains external links. Please review our external linking policy.

Jonathan Rees is the Managing Director of Western Union Business Solutions in North America. Western Union Business Solutions is an International Trade Administration Strategic Partner.

U.S. exports have increased dramatically since 2009 but have begun to plateau since 2013.A healthy U.S. economy includes strong exports. In an age of ever-increasing global trade, these exports indicate the demand for U.S. products and services, particularly in countries with an expanding middle class.Since 2010, the government has committed to help U.S. businesses find buyers worldwide, win more contracts, and learn new ways to sell products and services overseas. This commitment highlights the importance of small and medium-sized enterprises (SMEs) in propelling the American economy.

However, after a sharp appreciation, over the last two years U.S. exports have been showing signs of hitting a plateau.

The good news is this: U.S. exports have abundant room to grow. In fact, compared to other industrialized countries, there are signs that the United States is only beginning to tap into its export potential.

According to the World Bank, exports accounted for only 14 percent of the U.S. GDP in 2012, while other Western industrialized nations, such as Germany, the United Kingdom and France, export between 30 to 52 percent of their GDPs. According to the  U.S. Small Business Administration, SMEs in the United States generate more than 46 percent of the country’s nonfarm private gross domestic product. They also comprise 98 percent of America’s exporters and produce 33 percent of all export value – clear drivers of economic growth.

So what can American SMEs do to expand this export potential? Simply put, make it easy for the buyer.

Successful exporters try to make their goods and services as attractive as possible, regardless of the buyer’s location. American exporters can take some easy steps to do this and protect profits at the same time. By using the right combination of payment and cash management strategies,  SMEs can improve their cash flow and increase overseas demand.

Here are three tips to help:

  1. Plan ahead and create a cross-border payment strategy that supports your company’s cash flow while hedging foreign exchange risk. Most foreign buyers generally prefer to trade in their local currencies to avoid foreign exchange (FX) exposure.  As such, selling in foreign currencies can be a viable option for SMEs who wish to enter and remain competitive in global markets.   It’s important for SMEs to take a critical look at their business needs and build a cross-border payment strategy that can hedge FX risk. Find a partner that can help you determine what your cross-border payment needs are and set your actions accordingly.  One of the possible solutions to hedge FX risk is a forward contract, which enables the exporter to sell at a set amount of foreign currency at a pre-agreed exchange rate with a delivery date from three days to one year into the future.  Forward contracts can be ideal for protecting against FX fluctuations and are useful for budgeting.
  2. Use a budgeting tool that gives visibility to FX exposures and simplify foreign accounts payable. If you are doing business in multiple countries and receiving payment in multiple currencies and from different time zones, it’s helpful to use a payment solution product that will help you keep track of your invoices. Some providers also offer budgeting products that automatically calculate total currency exposure for multiple invoices. This allows businesses to use a single platform to track cross-border incoming and outgoing cash flows so that businesses can make more informed decisions.  Such international budgeting and cash management products are offered by many reputable global financial services firms, including Western Union Business Solutions.
  3. Settle invoices with overseas vendors in their local currency. Setting prices in vendors’ local currency as a practice hasn’t been widely adopted in the  United States., but it’s worth considering. If your company does a high volume of trade in a certain country or currency, it makes sense to bill your customers in that currency. Overseas vendors often charge extra fees for paying companies in U.S. dollars in order to mitigate against currency risk. For example, research from Western Union Business Solutions shows that one in five Chinese suppliers adds roughly 3-4 per-cent to  U.S. dollar invoices to cover FX fluctuations. Making deals with overseas vendors using their local currency also gives business owners the opportunity to negotiate a discount.

This last step represents a simple change in foreign exchange strategy that can send a signal that you, the exporter, understand your overseas customers and want to make it easy for them to do business with you. It is just a matter of thinking about what the customer wants and acting on it – a good strategy for any business.

To learn more about how to manage FX risk and how to export in foreign currencies, you may wish to read the U.S. Commerce Department’s Trade Finance Guide: A Quick Reference for U.S. Exporters.

Happy World Trade Month!

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Global Connect: Arizona Trade Finance Seminar: A Must Attend Seminar to Learn How to Access Capital and Financing for Exports

February 13, 2014

Yuki Fujiyama is a trade finance specialist with the Office of Finance and Insurance Industries in the International Trade Administration.

The Arizona Trade Finance Seminar takes place Feb. 21, 2014 at the Thunderbird School of Management.

The U.S. Department of Commerce is partnering with a number of local organizations and federal agencies in offering The Global Connect: Arizona Trade Finance Seminar at the Thunderbird School of Global Management on February 21 in Glendale, Ariz.

This seminar will be available in person and via teleconference, covering a series of important export finance subjects:

  • How to get paid from export sales;
  • Ways to approach and work with banks to enter and grow in global markets;
  • Steps to access export working capital and trade credit;
  • How to increase export sales;
  • Methods of receiving payment in foreign currencies;
  • U.S. government export assistance resources; and
  • Global business development resources for minority-owned businesses.

Global Connect: Arizona will bring together experts from both the public and private sectors to discuss resources available to U.S. exporters. This applies to businesses of any size for their financing needs.

One-on-one counseling sessions are also available to provide export finance guidance specific to the needs of your organization.

Support for Hispanic-Owned Businesses

This training is open to businesses Across the United States, there are 2.3 million Hispanic-owned businesses, according to the latest data, and more than 10 percent of Arizona businesses are Hispanic-owned.

Data also show that minority-owned businesses are twice as likely to export as other U.S. firms. As Hispanic-owned businesses in Arizona and across the country look outside U.S. borders for more sales, it will be important for them to understand their finance options.

This session will be a crucial educational tool for these business leaders, and a great augmentation to the International Trade Administration’s Spanish-language Trade Finance Guide. 

Co-Sponsors and Partners

This session is made possible through cooperation among several local, state, and federal organizations:

We hope to see you at the event, so be sure to register today! For more information, please visit the Office of Finance and Insurance Industries.

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How Are Escrow Services Used In International Trade Transactions?

September 25, 2013

This post contains external links. Please review our external linking policy.

Andrew K. Sokol is General Manager of Emerging Markets at Escrow.com, an International Trade Administration Strategic Partner.

The Trade Finance Guide is a helpful guide for U.S. companies that want to learn the basics of trade finance.

The Trade Finance Guide is a helpful guide about the basics of trade finance.

About a year ago, Professor David Wyld, Robert Maurin Professor of Management at Southeastern Louisiana University, wrote an article titled, “Securing the Transaction: The Advantages of Using Online Escrow Services Versus Letters of Credit in International Trade.” In that article, Professor Wyld predicts that with the use of escrow services, “we will see a growth in exporting (and importing) activities around the globe.”

The question is…what is an escrow service and how is it used in international trade transactions?

The International Trade Administration’s Trade Finance Guide (TFG) says an escrow service is a cash-in-advance option available to exporters and importers that reduces the potential risk of fraud. It acts as a trusted third party that collects, holds and disburses funds according to exporter and importer instructions.

Here’s how it works: the importer sends the agreed purchase amount to the escrow service. After payment is verified, the exporter is instructed to ship the goods. Upon delivery, the importer has a pre-determined amount of time to inspect and accept the goods. Once accepted, the funds are released by the escrow service to the exporter. The escrow fee can either be paid in full by one party or split evenly between the exporter and the importer.

The TFG also points out that, as an exporter, any sale is a gift until payment is received. And, because getting paid in full and on time is the ultimate goal for the seller in each sale, an appropriate payment method must be chosen carefully to minimize the payment risk while also accommodating the needs of the buyer.

But, as illustrated in the TFG, different payment types present different risks to exporters than to importers. And for a variety of reasons, not all of the identified methods of payment are available, or desirable, to either exporters or importers. Here’s how the risk levels are illustrated in the TFG:

For exporters, the most secure payment method is cash in advance, followed by letters of credit, documentary collections, open account and consignment. For importers, the list is reversed in a measure of security. More information is available in the Trade Finance Guide.

The Trade Finance Guide shows how some payment methods are more secure than others, depending on whether you are an importer or an exporter.

For the first time, however, the new 2012 edition of the TFG includes escrow services for “transactions with importers who demand assurance that the goods will be sent in exchange for advance payment” and states that “escrow in international trade is a service that allows both exporter and importer to protect a transaction by placing the funds in the hands of a trusted third party until a specified set of conditions are met.”

In other words, escrow services can offer a mutually beneficial cash-in-advance method for both parties. Plus, offering escrow services as a method of payment can actually add potential importers to U.S. exporters. In many cases, deals just don’t happen due to a payment related “issue” – and one example might be that you, as the exporter, require payment in full and up-front but the importer is reluctant to send the money until they receive the goods. In this case, by offering escrow services, both parties can be satisfied, the payment issue is resolved, and the deal closes. Cross-border escrow services are offered by international banks and firms that specialize in escrow and other deposit and custody services.

Like with any new business opportunity, if you are considering the use of escrow services, do your due diligence and make sure the one you choose is licensed and accredited. You can also verify the service you choose to do business with via:

(Editor’s Note: This post focuses on one of several possible methods for receiving payments for exports. It is not intended to be an endorsement of escrow services or any organization that provides escrow services. More information is available in the Trade Finance Guide.)

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Trade Finance Guide Helps U.S. Businesses Compete, Now en Español!

May 30, 2013

Yuki Fujiyama, a trade finance specialist with the Office of Financial Services Industries in the International Trade Administration, is the author of The Trade Finance Guide: A Quick Reference for U.S. Exporters.

The inaugural Spanish language version of the Trade Finance Guide was released at the May 8 “Trade Connect” workshop held at the Los Angeles Area Chamber of Commerce. From right to left: Yuki Fujiyama of ITA, Hon. Sean Mulvaney of Ex-Im Bank, Cheryl Hines of Keylingo Translations, Bronwen Madden of CITD, Paul Thanos of ITA, Marta Chacon of FCIB, Diego Jiménez of FCIB, Norman Arikawa of the Port of LA, Carlos Valderrama of the LA Area Chamber, and Sergio Gascon of the MBDA Business Center.

The inaugural Spanish language version of the Trade Finance Guide was released at the May 8 “Trade Connect” workshop held at the Los Angeles Area Chamber of Commerce. 

On May 8, the U.S. Department of Commerce’s International Trade Administration unveiled the first Spanish language version of the Trade Finance Guide: A Quick Reference for U.S. Exporters.

The Guide is a simple and effective tool designed to help U.S. small and medium-sized enterprises (SMEs) learn the best ways to get paid from export sales. Now that the Guide is also available in Spanish, it can better help U.S.-based Hispanic and Latino companies compete in global markets.

What is the Trade Finance Guide?

The Trade Finance Guide covers 14 subject areas in easy-to-understand two-page chapters that are written in plain language. The Guide is:

  • A “60-minute” self-learning tool for new-to-export SMEs that wish to learn how to benefit from export sales.
  • A user-friendly tool for international credit, banking and trade finance professionals, as well as export counselors for client assistance.
  • A flexible educational tool for professionals teaching international business.

The Guide uses a no-nonsense approach to make it easy to understand appropriate payment methods and trade finance techniques when dealing with international transactions. There is a quick rundown of the pros and cons of each potential payment method, helping new-to-export companies pick the best method for them. The Trade Finance Guide has become one of the most popular export assistance resources published by the Commerce Department.

Spanish Language and Hispanic and Latino-Owned Businesses in the United States

The U.S. Census Bureau says Spanish is the primary language spoken at home by approximately 35 million people, a figure more than double that of 1990. The number of Hispanic and Latino-owned businesses, most of which are SMEs, increased by 44 percent to 2.3 million, more than twice the national rate between 2002 and 2007. These businesses generated $345 billion in sales in 2007, up 55 percent from 2002.

As the growing Spanish-speaking population continues its entrepreneurial growth, the Spanish version of the Trade Finance Guide will help their businesses enter into the global marketplace. The Guide will also help other American businesses work with buyers in Spanish-speaking markets, helping all U.S. businesses expand their exports.

Partnership and Cooperation

The Trade Finance Guide was created in partnership with the Finance, Credit, and International Business Association (FCIB) and in cooperation with:

The Guide’s Spanish language version was made possible through partial funding from the California Centers for International Trade Development and in collaboration with FCIB and the Commerce Department’s Minority Business Development Agency.

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What’s New in the Third Edition of the Trade Finance Guide?

November 27, 2012

This post contains external links. Please review our external linking policy.

Yuki Fujiyama, a trade finance specialist with the Office of Financial Services Industries in the International Trade Administration, is the author of The Trade Finance Guide: A Quick Reference for U.S. Exporters.

On November 13, 2012 in Philadelphia, we unveiled the third edition of the Trade Finance Guide: A Quick Reference for U.S. Exporters at the 23rd Annual Finance, Credit, and International Business Association (FCIB) Global Conference. Acting U.S. Commerce Deputy Assistant Secretary for Services Industries Carlos F. Montoulieu released the new edition emphasizing that, “This concise and easy-to-understand guide is designed to help U.S. small and medium-sized enterprises (SMEs) learn quickly how to get paid from export sales in the most effective manner.”

What is the Trade Finance Guide?

Trade Finance Guide: A Quick Reference for U.S. Exporters, third edition

Trade Finance Guide: A Quick Reference for U.S. Exporters, third edition

The Trade Finance Guide covers 14 subject areas in easy-to-understand two page chapters that are written in plain language. The Guide is:

  • A “60-minute” self-learning tool for new-to-export SMEs that wish to learn how to get paid from export sales.
  • A user-friendly tool for international credit, banking, trade finance professionals and export counselors for client assistance.
  • A flexible educational tool for professionals teaching international business.

The Guide uses a no-nonsense approach to make it easy to understand the importance of choosing the appropriate payment method and trade finance technique when dealing with international transactions. With a quick rundown of the pros and cons provided in each chapter, new-to-export SMEs will find the Guide’s recommendations for when one payment method and trade finance technique is best suited over another particularly helpful. With some 300,000 copies distributed to the public since the release of its first edition in 2007, the Trade Finance Guide has become one of the most popular export assistance resources published by the Commerce Department.

What’s New and Unique?

The third edition of the Trade Finance Guidehas been updated with new key information, refined to provide better clarity and adds two new chapters:

The Trade Finance Guide 3rd edition is released at the 23rd Anual Finance Credit and International Business Association Global Conference. From L-R Marta Chacon, Director, North American Operations, FCIB, Robin Schauseil, President, NACM (FCIB’s parent – National Association of Credit Management), Carlos Montoulieu, Acting DAS/Services Industries, Yuki Fujiyama, Trade Finance Specialist, OFSI/MAS/ITA, Ron Shepherd, Director, Membership & Business. Development, FCIB

The Trade Finance Guide 3rd edition is released at the 23rd Anual Finance Credit and International Business Association Global Conference. From L-R Marta Chacon, Director, North American Operations, FCIB, Robin Schauseil, President, NACM (FCIB’s parent – National Association of Credit Management), Carlos Montoulieu, Acting DAS/Services Industries, Yuki Fujiyama, Trade Finance Specialist, OFSI/MAS/ITA, Ron Shepherd, Director, Membership & Business. Development, FCIB

  • Consignment which explains how selling on consignment can provide the exporter some greater advantages which may not be obvious at first glance
  • Government-Backed Agricultural Export Financing which describes how U.S. exporters of agricultural products can turn sales opportunities, especially in risky emerging markets, into real transactions and get paid.

In addition to new content and updates, the third edition also offers unique features that make the Trade Finance Guide one of the most user-friendly publications produced by the Commerce Department. The new Guide is:

  • Easily accessible online to anyone with internet access and designed for both easy download and on-screen viewing.
  • Printer friendly because it was designed with printing in mind.
  • Eco-responsible because it was designed for digital distribution and to only use the smallest amount of paper and ink or toner possible when printed.

In addition, the new Trade Finance Guide is the first official ITA publication to have adopted a QR Code to make it easy for those with smart-phones to access the Guide’s homepage in cyberspace.

Partnership and Cooperation

The Trade Finance Guide was created in partnership with FCIB and in cooperation with the U.S. Export–Import Bank, the U.S. Small Business Association, the U.S. Department of Agriculture, the International Factoring Association, the Association of Trade & Forfaiting in the Americas, and BAFT-IFSA (Bankers Association for Finance & Trade–International Financial Services Association). FCIB, a two-time recipient of the President’s “E” Award, is a globally recognized business educator of credit and risk management professionals in exporting companies ranging in size from multinational to SMEs.

How to Obtain the Trade Finance Guide

Trade Finance Guide, third edition QR Code

Trade Finance Guide, third edition QR Code

The Guide is available through the U.S. government’s export portal, Export.gov/TradeFinanceGuide, both as a complete guide and as individual chapters for those only wishing to learn a specific trade finance technique. You may also scan the QR Code below to go straight to the Guide’s homepage.

Coming Soon: Trade Finance Guide in Spanish

The Commerce Department is currently working with the California Centers for International Trade Development to create a Spanish version of the Trade Finance Guide. The Spanish version will help SMEs expand their global presence, especially in Mexico and Latin America, where Spanish is the primary language. Please stay tuned as the Trade Finance Guide’s inaugural Spanish version is scheduled for release in a few months!

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Trade Finance Guide: Now Online, with User-Friendly Features!

March 13, 2012

Natalie Soroka is an Economist on detail with Manufacturing and Services’ Trade and Project Finance Team, a part of the Office of Financial Services Industries.

Let’s face it, for a new exporter, figuring out trade finance options can be daunting. With so many options available it can be hard to know where to even start (just what is forfaiting, anyway?).

Luckily, the Commerce Department’s International Trade Administration publishes the Trade Finance Guide: A Quick Reference for U.S. Exporters. The Guide is designed to help U.S. companies, especially small and medium-sized businesses, learn the basic fundamentals of trade finance so that they can turn their export opportunities into actual sales and achieve every business’s ultimate goal: getting paid.Cover image of the Trade Finance Guide 2008

Until recently, the Trade Finance Guide was only available in print form (by order) or in a series of PDF files off of a variety of sites. However, now these concise chapters are available on the web, allowing you to click through the entire guide, or navigate to a specific chapter based on your personal interest.

Quick, easy-to-read chapters cover topics such as the various methods of payment available in international trade, export working capital financing, export credit insurance, and yes, forfaiting.

In addition to covering the basics, the guide also notes where to go for more information, training, and who to contact with questions about trade finance, the guide itself, and partners who collaborated with the Commerce Department in creating the Trade Finance Guide.

For more information, just check it out yourself! The most recent version of the Trade Finance Guide is available on export.gov, at http://www.export.gov/tradefinanceguide

Be sure to check back for updates, as the Guide is revised from time to time. Future editions will include new chapters that discuss other trade finance techniques and related topics.

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