More than 400,000 U.S. businesses trade internationally, and more than 97 percent of them are small and medium sized enterprises.[i] Foreign trade attracts the attention of companies and governments looking to take advantage of this important economic lever. Exporting can take time to research and setup as every country has its own regulations, business conventions and cultural traits. When importing, companies need to comply with applicable laws and regulations to have goods admitted into the U.S. Using available resources and finding the right partners is vital to success.
Tap into government resources
As you plan your global development, take advantage of third-party resources such as the U.S. Department of Commerce and sourcing agents experienced in your industry. Partners like these can get you the intelligence you need about suppliers and costs:
- The United States International Trade Commission (USTIC) is a federal agency with information on trade shifts and tariffs, including the official Harmonized Tariff Schedule (HTSA). Information on import injury and intellectual property violation investigations is housed there as well. (www.usitc.gov).
- The International Trade Administration (ITA) works to improve the global business environment and help businesses compete abroad with country and regional experts and field staff along with country-specific export promotion and market access support. The ITA also promotes the United States as an investment destination. (www.trade.gov).
- The U.S. Customs and Border Protection Agency (CBP) offers in-depth information on how to avoid potential problems with the clearance of imported goods. CBP offers the Automated Commercial Environment (ACE) tool to determine import admissibility using import and export reporting provided by the trading community. (https://www.cbp.gov/trade).
Practical financial tools
Businesses use a set of risk management tools to balance their ability to compete globally with their need to protect profits and optimize working capital. Manage currency risk with foreign exchange (FX) services to:
- Reduce the risks of currency shifts for offshore revenues and profits.
- Offer an opportunity to control foreign currency conversion, even when paying in US Dollars, and gain pricing advantages.
Secure payment solutions
- Provides a cost-effective alternative to letters of credit that don’t tie up a company’s line of credit.
- Offers more protection than open account terms, reducing risk exposure versus payment in advance.
- Assures prompt payment to the supplier's bank once bill of exchange and shipping documents are provided.
CURRENCY RISK MANAGEMENT STRATEGY QUESTIONS
- Are we taking full advantage of the savings made possible by paying in local currency?
- Will a dual currency billing strategy allow us to lock in rates and realize lower costs?
- How will a strong or weak dollar affect our position against the competition?
- How will a strong or weak dollar impact our strategic business plans?
- Are we hedging our foreign exchange (FX) exposure?
- Will our FX hedging strategies remain effective in a changing market environment?
- Do we have adequate capacity for our foreign exchange transaction activities?
Letters of credit
- Provides a universally-accepted form of payment that reduces payment risks for importers and exporters.
- Assures importers that the exporter must follow payment terms set out in the letters of credit.
- Allows exporters to get a measure of assurance that they will be paid once they ship the product according the letters of credit terms.
Supply chain finance
- Improves cash flow by linking importer, supplier and banks together to finance imported goods as they move from country of origin to the U.S.
- Helps lessen the burden on suppliers by offering U.S. financing based on the creditworthiness of the importer.
- Includes a variety of solutions from asset-based lending and factoring to inventory finance and payables discounting.
Expertise matters in trade
Build long-term partnerships with knowledgeable experts when embarking or expanding your company's global business opportunities. The key to success is to find and work with partners who can simplify the complexity of global business and accelerate your progress by bringing years of trade experience and local market knowledge to your management team.