Archive for the ‘Trade Finance’ Category

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STRENGTHENING CREDIT CONDITIONS FOR EXPORTING SMALL AND MEDIUM-SIZED ENTERPRISES

April 6, 2018

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Ericka Ukrow is a Senior International Trade Specialist specializing in Financial Services at the International Trade Administration.

Photo of TFAC meeting in progress, Feb. 22, 2017. From left to right front row: TFAC Chair Kevin Klowden, Commerce Secretary Wilbur Ross, Commerce Deputy Assistant Secretary for Services James Sullivan, Designated Federal Officer for the TFAC Ericka Ukrow.

Meeting of the TFAC, February 22, 2018. From left to right front row: TFAC Chair Kevin Klowden, Commerce Secretary Wilbur Ross, Commerce Deputy Assistant Secretary for Services James Sullivan, Designated Federal Officer for the TFAC Ericka Ukrow.

Exporters, lenders, and researchers are working together to improve options for trade financing through the Department of Commerce’s Trade Finance Advisory Council (TFAC).

In an increasingly interconnected global economy, trade is taking a prominent role in our country’s economic growth.

The availability of finance is essential for a vigorous trading system. Most export transactions are supported by some form of financing or credit insurance. However, significant gaps in the global provision of trade finance remain.

Globally, the trade finance gap in 2017 was estimated at $1.5 trillion, with small and medium-sized enterprises (SMEs) facing the greatest hurdles to access trade finance.

The TFAC advises the Secretary of Commerce on effective ways to increase access to financing resources for all U.S. exporters, especially SMEs. With up to 20 private-sector members representing financial and insurance services providers, manufacturing firms, trade finance industry associations, and research organizations, the TFAC’s thought-leadership coordinates perspectives from diverse stakeholders into the development of policies and programs in this area.

These insights help direct Commerce’s actions toward conducive framework conditions that would amplify U.S. exporters access to strategic educational and financing resources.

Over the last fifteen months, the TFAC has focused on:

  1. export finance best practices;
  2. enabling new private sector channels for the flow of credit to exporting SMEs;
  3. education strategies to reduce the information gap across government, community banks, and other enablers of SME finance;
  4. addressing financing process obstacles that impede SME credit;
  5. analyzing trade credit insurance underutilization in the United States; and
  6. reviewing the performance of alternative export credit agencies’ models.
Photo of TFAC meeting in progress, Feb. 17, 2018. From left to right: Alan Beard and Patricia Gomez (new members), Lou Tierno – Fulton Financial Corporation, Stacey Facter – Bankers Association for Finance and Trade, Peter Bowe – Ellicott Dredges, Gary Mendell - Meridian Finance Group, David Herer – ABC-Amega.

Meeting of the TFAC at the Commerce Department, February 22, 2018. From left to right: Alan Beard and Patricia Gomez (new members), Lou Tierno – Fulton Financial Corporation, Stacey Facter – Bankers Association for Finance and Trade, Peter Bowe – Ellicott Dredges, Gary Mendell – Meridian Finance Group, David Herer – ABC-Amega.

At the February TFAC meeting, Commerce Secretary Wilbur Ross recognized the Council for its critical role in advancing the Administration’s goal of reducing U.S. trade deficits by empowering more SMEs with financing solutions that would increase their export opportunities.

“While we seek to level the playing field and negotiate more favorable terms with our trading partners, we count on you to continue empowering SMEs in the international arena. Without adequate access to finance, it is difficult for U.S. exporters to sell their products and services globally.”

He also encouraged Council members to identify how emerging technologies, such as blockchain, could facilitate trade finance solutions and reduce risk for U.S. SME exporters.

The TFAC also welcomed Secretary Wilbur Ross’ new appointed members this year:

  • Steven Bash, Senior Vice President, International Banking, City National Bank
  • Alan Beard, Managing Director, Interlink Capital Strategies
  • Russell D’Souza, Vice President, Corporate Treasurer, Hanesbrands, Inc.
  • Patricia Gomes, Managing Director, Regional Head Global Trade and Receivables Finance North America, HSBC Bank USA, N.A.
  • William Browning, Senior Vice President, Business Credit – Trade Finance Manager, First National Bank
Photo of TFAC meeting in progress, Feb. 22, 2018. From left to right: Todd McCracken - National Small Business Association, Sergio Rodriguera - The Credit Junction, Karsten Herrmann - Munich Reinsurance America, Tim Gaul - Caterpillar, and new members Russell D’Souza and Steven Bash.

Meeting of the TFA at the Commerce Department, February 22, 2018. From left to right: Todd McCracken – National Small Business Association, Sergio Rodriguera – The Credit Junction, Karsten Herrmann – Munich Reinsurance America, Tim Gaul – Caterpillar, and new members Russell D’Souza and Steven Bash.

These new appointees expand the Council’s expertise in their representation of both users and providers of trade finance in the manufacturing, banking, and management consulting services sectors.

The TFAC expects to discuss improving the credit conditions and diversifying financing sources for U.S. exporters at their Spring meeting.

If you would like to learn more about the TFAC, you can visit our website or you can contact us at TFC@trade.gov.

If you are interested in becoming a member of the TFAC, stay tuned! The Council may be looking for applicants this summer. You can learn more here.

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The NASBITE Certified Global Business Professional Credential Program Helps Advance U.S. Exports and International Trade

September 14, 2017

About the authors: Yuki Fujiyama is a trade finance specialist in the Office of Finance and Insurance Industries and the author of the Trade Finance Guide: A Quick Reference for U.S. Exporters. Fujiyama currently serves as an ex-officio Board Member of NASBITE International.  Cory Simek, the Executive Secretary of the Missouri District Export Council, currently serves as the Director of the U.S. Commercial Service – St. Louis, Missouri.

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

Helping U.S. businesses, especially small- and medium-sized enterprises (SMEs), enter and compete in global markets is a core mission of the International Trade Administration (ITA), the federal government’s lead export promotion agency.

As part of that ongoing effort, ITA and the University of Missouri International Trade Center–a joint program of the Missouri Small Business & Technology Centers and the University’s Robert J. Trulaske, Sr. College of Business–recently partnered to present a three-day interactive training workshop designed for those seeking to earn the Certified Global Business Professional (CGBP) credential.

Participants of the NASBITE CGBP Preparation Training Workshop on August 8-10, 2017 at the Robert J. Trulaske, Sr. College of Business at the University of Missouri in Columbia, Mo.

Participants of the NASBITE CGBP Preparation Training Workshop on August 8-10, 2017 at the Robert J. Trulaske, Sr. College of Business at the University of Missouri in Columbia, Mo.

The CGBP credential program, which helps advance U.S. exports and international trade, is administered by NASBITE International (NASBITE), a non-profit and ITA strategic partner.  Launched in 2005, the NASBITE CGBP provides a benchmark for competency in global commerce by certifying an individual’s ability to conduct international business at the professional level across four main categories:

  • Global Business Management
  • Global Marketing
  • Supply Chain Management
  • Trade Finance

These categories capture the key challenges facing SMEs in today’s highly competitive global business environment.

To become a CGBP, a candidate must pass a three-hour exam comprising 150 multiple-choice questions, and have completed two years of either college-level study or work in global commerce.

NASBITE CGBP – Certified Global Business Professional – Credential Logo

NASBITE CGBP – Certified Global Business Professional – Credential Logo

Since 2005, ITA has used the CGBP credential program to enhance the ability of its employees to assist American SME exporters in accessing global markets.  The CGBP credential enables ITA team members to diversify their skills and stay abreast of the ever-changing aspects of international trade.  To date, almost 2,000 professionals worldwide, including several hundred ITA trade specialists and commercial officers, have been awarded the CGBP credential.

The three-day workshop was facilitated by NASBITE Past President, Jim Foley, who is currently serving as the Director of the Illinois SBDC International Trade Center at Bradley University and as the National Co-Chair of the International Trade Committee of America’s SBDC, which represents a nationwide network of approximately 1,000 SBDCs.  ITA co-facilitated the workshop’s trade finance session and helped participants learn about the methods of payment and export finance options described in the U.S. Commerce Department’s Trade Finance Guide.

In addition to the annual CGBP Preparation Training Workshop, the University of Missouri International Trade Center actively collaborates with ITA’s two local U.S. export assistance centers in St. Louis and Kansas City to assist Missouri-based SMEs with export planning and foreign market sales.  The Center won the 2016 President’s “E” Award for Export Service in recognition of its dedication to supporting Missouri SMEs in understanding the export process and entering new international markets.

In 2016, Missouri’s $14 billion in goods exports helped contribute to the $2.21 trillion of U.S. goods and services exports. In 2015, nearly 88,000 U.S. jobs were supported by goods exports from Missouri.  In 2014, over 5,000 SMEs in Missouri exported their goods to global markets, accounting for 85 percent of Missouri goods exporters.

With the new knowledge gained from the three-day workshop at the University of Missouri, participants, who are ready to take the next step in obtaining the CGBP credential, are now more equipped to enter, grow, and succeed in global markets!

Do you need more info on how to become a CGBP?

Visit the NASBITE website at http://nasbite.org.

Do you want to learn more about how to enter, grow, and succeed in global markets?

Visit the U.S. government’s export portal at https://www.export.gov.

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First Meeting of Trade Finance Advisory Council Seeks Increased Access to Finance for U.S. Exporters

December 12, 2016

Ericka Ukrow is a Senior International Trade Specialist in the Office of Finance and Insurance Industries

The Department of Commerce has responded to the needs of its clients and partners – it is stepping up efforts to expand private sector trade finance with the inaugural meeting of the Trade Finance Advisory Council (TFAC).

The Council is comprised of 20 private-sector leaders representing banks, financial technology companies, other trade finance organizations, exporters, and a research institution charged with advising the U.S. Commerce Secretary on policies and programs that can help expand access to private sector trade finance for U.S. exporters, especially small and medium sized enterprises (SMEs), and educate them about the resources available.

meeting

TFAC members sharing their perspective on key priorities for the TFAC with Commerce officials.

In her remarks last month to the Council, Secretary Penny Pritzker underscored the importance that trade finance plays in supporting trade. “Nearly all global merchandise trade, worth in excess of $18 trillion annually, is supported by some sort of finance or credit insurance. Put simply: without trade finance, there is no trade,” she said.

More of Secretary Pritzker’s tweets can be found here:

https://twitter.com/PennyPritzker/status/799655952257466368

https://twitter.com/PennyPritzker/status/799652779472076800

Acknowledging that the federal government is a critical source of American exporters’ financing needs, Secretary Pritzker reminded all participants that ultimately, it is the private sector that finances approximately 98 percent of U.S. export transactions. Accordingly, she affirmed the Department’s commitment to working collaboratively with the private sector in supporting efforts that will enhance the financing environment of our exporters and their foreign buyers.

Deputy Secretary Andrews shared Commerce’s priorities and vision for the TFAC. “Without adequate levels of trade finance,” he said, “companies considering whether to expand overseas might never do so; and companies already engaged in exporting may not expand to new markets. This limits the potential for a key element of our country’s economic growth strategy – ultimately costing us jobs that otherwise would have been created. That is why access to finance has been an important part of the Administration’s export agenda.We need industry to help us find solutions to the systemic barriers that impact this sector,” he added.

Council’s Key Priorities

Under direction of the Advisory Council Chair Chris Bozek, a seasoned banker and now Bank of America Merrill Lynch’s North America Head of Trade and Global Product Executive, Council members deliberated and established four initial areas of focus:

  • Innovation and Financial Technology
  • Collaboration and Partnerships
  • Education and Outreach
  • Market Information

These key areas align with the Secretary’s shared vision.

Other Speakers

Recognizing the important role of federal export financing agencies and regulators in the dialogue, Commerce invited representatives from the Export-Import Bank, Small Business Administration, U.S. Department of Agriculture, and the U.S. Department of The Treasury to brief members on their perspectives in this area.

Council members also had the opportunity to learn about existing Commerce resources that support U.S. exporters such as the Trade Promotion Coordinating Committee (TPCC), the Strategic Partnership Program, guides to exporting and trade finance, market intelligence reports, and trade missions. They also learned about financing programs and services that the Minority Business Development Agency offers to its client companies.

In his closing remarks, Acting Assistant Secretary for Industry and Analysis, Ted Dean, assured members that “in collaboration with the broader U.S. government, Commerce stands ready to work with Council members to ensure they have the support they need to provide important insights on opportunities to enhance the trade finance environment for our exporters.”

It was an inspiring environment, underscoring that achieving an enhanced financing environment for American exporters is not a task that government can do alone. It must be built on a commitment of collaborative work between the government, private sector and academia. This meeting marked a key step to embracing this path.

The Council is scheduled to hold its second meeting in early spring of 2017.

To learn more about the Department of Commerce Trade Finance Advisory Council, please visit www.trade.gov/tfac or contact us at TFAC@trade.gov.

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

July 10, 2014

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

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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How to Get Paid for Your Aerospace Exports

June 17, 2014

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Fred Elliot is a Trade Specialist with the Aerospace Team at the International Trade Administration.

Photo of an airplane engine.Have you ever wondered if you should extend credit to your overseas customers in the same way you do your national customers? Or whether your banking relationships are solid enough to allow this type of credit?

Now’s the time to start getting some answers. Register now for the July 24th Trade Finance Webinar for U.S. Aerospace Exporters and gain expert insight about topics such as:

  • Dos and don’ts of export finance;
  • Methods of payment from overseas customers;
  • How the Export-Import Bank and the Small Business Administration (SBA) can help finance aerospace exports, and;
  • Ways the U.S. Department of Commerce is helping aerospace manufacturers learn about export opportunities and how to take advantage of them.

Companies in southern Ohio are welcome to participate in-person in Cincinnati, where you can meet one-on-one with finance experts from the Export-Import Bank, SBA, the U.S. Department of Commerce’s International Trade Administration, and PNC Bank, who can answer any questions you may have.

Both webinar and in-person attendees will leave this event better prepared to succeed in global business.

You can register or find more details online, or contact Howard Thompson of the Ohio Aerospace Institute at (440)-962-3237.

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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.)