You’ve targeted your international markets for expansion. Or perhaps you’ve discovered a smart overseas supply chain to better manage costs. Now what? It might be time to consider switching to a bank that specializes in client-focused international banking services. Here are three crucial services you might need:
First and foremost, a bank with international banking expertise will provide foreign exchange services whether your business is buying from overseas suppliers or selling to customers or B2B clients abroad. Any time a transaction occurs, it must be converted to local currency at the current exchange rate—a price that is subject to change based on supply and demand. Having a relationship with an international banking partner will make such transactions seamless and ensure both fees and risks are limited. The bank can also present credit card solutions for overseas travel to eliminate foreign transaction fees.
Lines of Credit
Financing can become increasingly difficult when exporting goods or services, but only when existing banking products do not match the growing needs of your business. Government-guaranteed export lines of credit judge creditworthiness partially on foreign accounts receivable and sales inventory, and allow for lending up to 90% and 75% of their respective values. A business’ bank of choice should be backed by the Export-Import Bank of the United States (EXIM) as it provides higher available credit with the same collateral required for traditional loans. Similarly, a bank’s relationship with the Small Business Administration (SBA) ensures secure financing with equal attention to the business’ current capital and future growth.
Letters of Credit
Banking with an institution that can provide letters of credit is invaluable to the time-sensitive nature of daily cross-border operations. The following are most common:
Commercial Letters of Credit can be drawn up to facilitate all import/export transactions between the issuing banks and ensure payments are made to the proper beneficiary.
Standby Letters of Credit are routinely needed for foreign trade and non-trade activities to guarantee a backup payment method in the event a client breaches the contract.
Shipping Documents may be requested against either payment or credit terms.
An international banker can also facilitate project bids by providing bonds and lease guarantees.
In addition to offering a host of products and services, banks that excel in in international banking must have a comprehensive understanding of trade agreements and provide appropriate solutions for all financial aspects of doing business abroad. With over half a million small businesses in the state of Arizona alone (according to the 2017 Arizona Small Business Profile), a bank with a High Level of Delegated Authority by EXIM can help you reduce friction when expanding beyond the domestic market.