In order to be a success in your export activities, you need
to
know how to finance your import or export and how to get paid,
espescially
when dealing in foreign currencies. Your banker can and should be
a key member of your advisory team. Finding a bank that is
comfortable
and proficient in providing the various products and servcies required
by
exporting and importing firms is becoming easier as international sales
become more and more common. The expansion of the internet and
the
advent of e-banking are also helping to increase the number of banks
that
companies can work with for their international banking
requirements.
Banking
Products And Services You Should Know About
Depending
upon
the industry in which your company operates, there are several products
and services available from major international banks that can
help
you to get ahead of the competition. Financing and speed are
integral
to any sale and now is the time to look for banks on the leading edge.
Multinational
companies, commodity companies, capital equipment and consumer product
producers
are the primary users of trade financing products, which include import
letter of credit, export letter of credit, stand-by letters of credit,
collections, trade-related loans, structured and barter
trade. The most common of these is the letter of credit.
Simply put a letter of
credit is a banking mechanism that permits importers to offer secure
terms
of sale to exporters.
In the past,
most
companies didn't need to know about letters of credit. With the
expansion
of international trade, this has changed and even small companies
increasingly
are coming to utilize letters of credit and other even more advanced
international
financing services. Knowledge is power and you should learn about
each of these instruments and evaluate if they are applicable to your
particular transaction. Definitions of most of the products such
as letters
of credit are included in the Glossary on this website. The
website www.mantissa.co.uk
offers both a quick and a more extensive course for learning more about
Letters of Credit and other international financing instruments.
This
subject is very important both for exports and imports and a visit to
the
website is definitely recommended.
In addition
to
providing the services above, companies should also expect the
financial
institution to be able to provide products through a web-enabled
delivery
portal. Many of the best trade banks are already doing
this.
Additionally, your international bank should also be able to offer
information
on the following value-added trade products and services such as:
- Prepayment
and structured pre-export facilities: these services finance pre-export
fabrication and provide export financing for a country’s key exports.
- Export
receievables financing.
- Government-backed
insurance and guarantee programs: These are available from government
bodies
such as Eximbank or private insurers and can help your company spread
the
risk.
- Programs
offered by regional development banks and institutions: the IFC, ADB,
World
Bank, and other institutions support international sales by
providing
guarantees as credit support or enhancement.
- Linked
exports
and import financing: In some countries the export contract can act as
security
for essential imports. For example, in some countries that export
value-added products (Asia has many), if imports (generally but not
always
raw materials) do not flow into the country then value-added exports
stop.
An international bank can credit-enhance the deal by using the export
contract
as security thus allowing country imports to continue.
- Global
trade
management: This allows you to out-source the trade documentation
preparation
to others who are more familiar with it and who work with these forms
daily.
- Option-linked
financings for commodities: Again, these are risk spreading
options.
Examples are trade finance solutions that have interest rate, foreign
exchange,
and commodity-hedging options. These can be made part of the
transaction
if desired.
- Counter-trade
transactions: commodities, durable and other goods are essentially
bartered.
- Forfeiting:
This is a provision of medium-term trade finance where trade contracts
are
sold into the secondary market.
- Multinational
inter-company structured trade/tax facilities.
Online
Letters
of Credit - The International Bank of the Future
For a
company
dealing globally, the internet is a critical tool for speed and
efficiency
of communications. One area where it is still in its infancy,
however,
has been in financing international deals. This is
changing.
Recently Imperial Bank launched its online SWIFTrade service at www.imperialbank.com/home.asp
The site was in beta testing for two years prior to this so this is a
very
mature service at this point. With this service, Imperial Bank’s
customers
can obtain a letter of credit immediately and have it seen immediately
by
those who need to know about it.
The
information
in the system is not public and if fact most people wouldn't have
access
to it. For example, the system can be kept secure by a series of
passwords.
In the case of imports, the importer can let the person selling to him
see
the letter of credit online by supplying a password; the exporter then
doesn’t
have to wait to be advised by his bank in his home city and can begin
production immediately. In the case of fast changing market
requirements such
as fashion or toys, this speed can be critical. The company
receiving
the letter of credit can also allow others to view the document such as
freight forwarders, customs brokers or other specialists, so
preparation
and paperwork can begin in those areas, as well.
The Imperial
Bank
also has an online system for financing. The importing company
can
fill out an application online at the website.
SWIFTrade is
still
being enhanced but can already provide the following online services:
- Letter
of
credit issuance;
- Sending
electronic copies of letters of credit to the beneficiaries via e-mail;
- Allowing
shippers and other partners of the company acquiring the letter of
credit
to have access to specific portions of the information to speed their
work;
- Tracking
the status of letters of credit;
- Monitor
account activity, even for accounts held with foreign banks.
International
Trade Banks
Most of
the
Major International Banks are already working on systems like SWIFTrade
system described above. Most provide similar services. A
good
websites to use in searching for international banks is www.qualisteam.com. This website
gives you hotlinks to hundreds of banks around the world. It also
has useful links to many other banking sites. One additional site
that can be very useful to a business seeking information on a
particular
bank or on banking products is www.bankersalmanac.com
Following is a list of international bank websites:
INTERNATIONAL
BANK WEBSITES
