From export letters of credit to working capital loans, there are a range of trade finance products designed to help exporters mitigate risk.
With two-thirds of the world’s purchasing power located outside of the United States, an increasing number of American businesses have begun exporting their goods and services overseas. For many, the benefits are clear: Expanding into foreign markets helps manufacturers, distributors, and service providers both increase and diversify their revenue base. Plus, firms that export their goods typically create more jobs and pay higher wages compared to non-exporting firms, according to the International Trade Administration.
Of course, there are potential challenges to consider. Payment risk management, currency risk management, and working capital availability are all common concerns that Carson Strickland, Senior Vice President of Global Trade Finance at Regions Bank, sees and addresses while working with clients. But where there are challenges, there are also solutions.
“Regions’ commercial clients have the support of local relationship managers who bring in industry and product expertise to give them ideas and guidance on how to run the business better,” Strickland says.
Mitigating Financial Risk for Exporters
As a distinguished member of the Export-Import Bank of the United States (EXIM), an independent federal agency and one of the largest international banking networks in the world, Regions Bank offers a suite of products and services to help businesses of all sizes mitigate financial risk while expanding their business.
“For companies that may be considering exporting, utilizing some of the tools and solutions that we provide can help them mitigate the risks associated with dealing with foreign buyers, particularly those that they haven’t dealt with before,” explains Bryan W. Ford, Vice President and Head of Corporate Sales and Treasury Management at Regions Bank.
Strickland points out that one particular pain point for companies that sell internationally is the often-elongated cash cycle.
“While transactions done domestically might turn in 30 to 60 days, the same sale internationally might take 90 to 180 days to come to fruition due to the differences in the financial systems and transportation issues,” he says.
For example, rather than selling on open terms, businesses can sell products utilizing an Export Letter of Credit through Regions Bank. This not only helps exporters mitigate country and commercial risk concerns, it also allows them to receive immediate payment for goods, ensuring they’re not reliant on a foreign buyer to make payment. This, in turn, also makes it possible for exporters to offer overseas buyers more attractive credit terms.
“With an Export Letter of Credit, a bank guarantees payment for each transaction as long as the outlined terms are met,” Strickland explains.
Working Capital for International Trade
For businesses that may require additional working capital to grow their business internationally, there are several loan solutions available through Regions Bank. EXIM Working Capital Loan Guarantee and the SBA Export Working Capital Program (EWCP) are two popular options designed to help businesses pay for any materials, equipment, and labor support necessary to fulfill export orders and increase their global competitiveness.
A third program, Trade Credit Insurance, can also help support the working capital needs of exporters by enabling them to insure foreign accounts receivable. This insurance provides an extra layer of security for exporters, while also enabling them to provide prospective buyers with more attractive account credit terms without taking on additional risk.
“We are focused on helping our clients be the best they can be in an increasingly global economy,” says Ford, noting that global trade finance is an area that Regions has been committed to for over 100 years. “We believe that we are able to provide exemplary service to our clients, while giving them access to tools and solutions that will enable them to grow their business.”
Ready to Grow?
As a Level 6 Delegated Authority Lender, a multiyear EXIM Lender of the Year Award recipient, and the number one SBA export lender in the country, our Global Trade Finance team is here to help you grow your business worldwide.
For more information, contact your Regions Relationship Manager or Treasury Management Officer.
