As they do more import/export business internationally, many
U.S.-based companies are looking hard for integrated solutions
that address a broad spectrum of needs and desires, from cash
management and compliance to traditional trade finance and logistics.
Chances are, this description fits your own organization. As
you do more business across the globe, you’re becoming a sophisticated
consumer of trade finance solutions. As your business has grown,
so has your knowledge. But has it grown fast enough? When you
operate in this complex environment, are you, your partners and
your customers certain that you’re using all the best tools and
processes the industry can offer? And are you able to tap information
and identify best practices that give you an edge in terms of
risk and working capital management?
To find out, we recommend that you answer the self-assessment
questionnaire below. You may be surprised — and empowered — by
your responses.
Am I a Serious Exporter?
Is export a good fit with your strategy and sales apparatus?
If it isn’t, should it be? Your banker can help you examine
your business and decide. Your approach should never be reactive.
Successful, proactive exporters solicit their bank’s input
as they analyze their export activity, to help form a holistic
picture and choose the right path at the right time. For instance,
serious exporters don’t wait for the eleventh hour to take
a hard look at their customer’s banks in higher-risk countries.
And when serious exporters are proactively in touch with their
bankers, they can expect better guidance because they are more
aware of the many and diverse ways their bankers can help —
and they are better prepared for negotiating the financial
aspects of their export transactions.
Which Countries and Exports?
Most companies export only a portion of their products — not
their entire line — but
want to be smart about doing more. If this describes your own
business, you need access to information that will help you identify
the right countries and the right markets for your trade expansion.
Your bank should do more than help you finance your transactions.
Referrals to experts on markets and regions, access to current
and targeted research, and the bank’s own experience with companies
like yours should all be readily available when you are building
your strategy and executing your plans for growth. A consultative
relationship with your bank can put you in touch with assistance
ranging from economists’ analysis to outsourced capabilities
in their financial partner networks. If you’re doing more in
Europe or Asia, your bank should be able to leverage their international
banking network to connect you with the credit-based solutions
you need, wherever and whenever you need them.
Who Are My Top 5 Clients?
Are you really identifying your most active clients, and are
you proactive or reactive in the way you’re working with them?
Your bank should provide you with targeted and customized information
that helps you paint the full export picture. Ask for consultation
on sales strategy and financial tools to help your sales teams
be more effective—up to and including credit to facilitate
business for their customers. When you get the right level
of partnership from your banker, you’re better prepared to
offer competitive pricing to your foreign buyers — and that
helps you more fully leverage those very important Top Client
relationships.
Which Currencies?
You’re seeing increased demand for quotes and invoicing in currencies
other than U.S. dollar, and believe you will need this capability
to stay competitive in all your markets. Do you understand
the total impact of such a move? Can your banker help you identify
ways you can reduce related risks by using certain risk-mitigation
tools? Can you get help when you need to build a pricing model
that works? The right multi-currency services provider will
help you consider all the pros and cons.
Physical and Financial Supply Chains — Where’s My Bridge?
Integrated “bridge” solutions are now available for your converging
cash, trade, logistics and risk management needs. Do you want
to minimize the volatility of your supply chain? Are you counting
on the working capital benefit of swift payments and smooth
cross-border movement of goods? Ask your banker about solutions
that include access to “restricted parties” screening information
that helps you better manage customs compliance. For exporters,
restricted party screening validates customers and trading
partners against several government-mandated lists —not just
a requirement, but an important risk management tool. Violations
of these export rules can mean unexpected fines and penalties,
as well as unexpected delays in shipment; customs compliance
with “Know Your Customer” regulatory requirements, from product
classification to documentation, helps you avoid negative impact
on your sales and fulfillment. Your banker should be able to
provide you with a tailored bundle of advisory, technological
and information management capabilities that’s appropriate
to the size of your export business today, and scaled to meet
your needs as you continue to grow.
What About My Trade Flows?
You may be in a situation where your understanding of trade flows
is based on reaction, not planning. If you are responding to
your international market rather than helping to create it,
you need to think about becoming a proactive exporter. That
means integrating your export transactions with the rest of
your business, and making trade vital to total sales working
capital and cash management. Your banker should be able to
provide you with information that not only puts export activity
in a broader balance sheet context, but suggests new ways for
you to find and hold a competitive edge.
Am I Managing All My Risk?
Best-practice risk management for transactions is key to your
success, and it’s extremely hazardous to get less-than-great
advice and support. Your bank should help you determine whether
the risk in your export business is accurately measured and
fully understood— especially regarding deals in new or changing
markets. Your banker should provide you with access to people,
products and processes that can identify, evaluate, understand
and mitigate certain risks associated with your deals. He or
she should also be able to help you highlight the consequences
of not solving problems and failing to be fully prepared for
crises.
How Do I Really Get Paid?
There’s life for exporters beyond letters of credit and collections
— your bank should be helping you trade up to better working
capital management. How does your export business impact your
working capital? How should your credit people be talking to
your salespeople about terms? How do they take the decision
to move to an open account? Are transactions properly risk-mitigated?
Your bank, like any trusted advisor, should be willing to help
you think about how to use the information you have to build
better metrics, more accurately forecast your balance sheet,
and in the end, truly manage your entire financial supply chain
at the international level.
Who Helps Me Put It All Together?
Your banker can help you think proactively about all the tools
and teamwork you need to run a successful export business.
Have you implemented sales tools like Export Pricing Schedules
or Term Sheets, or do you need help developing them? Have you
mapped your export process, including both internal and external
team members and tasks? Do you have the makings of a great
internal export team? Ask your banker to help you fully maximize
the value of your existing staff, identifying people with the
key attributes and skills that transfer easily to the export
side of your business. And once your internal team is formed,
ask your banker to facilitate meetings that help you identify
gaps in your resources and more effectively leverage your most
valuable external business partnerships. Your banker should
help you understand the whole picture — stakeholders, accountability,
and metrics. When you have the whole picture, it’s easier to
gauge your success and take ownership of it. Just remember
that you don’t have to get there alone.
How Do I Measure Success?
The reports you generate probably tell you much more than your
sales, accounts receivable outstanding, and what’s been paid.
Do you know how well you’re really doing? Are you profitable,
have you grown market share, and are you forecasting higher
gross total sales? What defines success for you from year to
year? Your export picture should never be static. Besides helping
you finance your export activities, your bank should help you
better analyze your Days Sales Outstanding (DSO) and true return
on capital via reporting drawn from your own information.
When Should I Ask My Banker For More?
Look at the annual dollar value of your exports. Is it time to
trade up? As you grow, you’ll need to think about the way you
do export business — and the way you ask your banker for help.
Your bank should be able to impart knowledge of regions and
countries and knowledge of how companies are using new bank
products like logistics solutions. Starting now, think of your
banker as not just a provider of traditional trade finance
instruments, but as a resource for a world of export data that
has been gathered, reported and analyzed — and can be related
directly to your business to help you make key decisions.
How Can I Trade Up to the Very Best?
The future of trade began yesterday, and for every successful
exporter, it’s focused on cutting-edge working capital management.
While the global economy expands rapidly, businesses of all
sizes have opportunities as never before — but in an environment
so competitive and complex, with ever evolving and emerging
risks, they need partnership with a bank that can offer access
to the best tools, resources, and expertise to be successful.
Before you go further, ask yourself what you need and deserve
from your banker. And then go get it!
For more information on financing solutions, please contact
Sarah Waterfill, V.P. of Corporate Banking at JP Morgan Chase’s
Louisville office, at (502) 566-2792 or sarah.s.waterfill@chase.com.
