Despite the recent financial crisis and global regulatory reform, international trade is growing. Commercial banks and other financial intermediaries offer trade finance products that help mitigate risks, provide financing, and guarantee return. This trade support is critical to international trade partly due to the heavy volume of exports targeted to lower-income countries, where limited credit makes trade more difficult. The trade finance tools used by your company can strengthen and support its export sales.
You are keenly aware of this situation as the newly appointed trade finance manager for TransStruc International, a global conglomerate with significant export sales. You are responsible for supporting the underlying businesses with the necessary trade finance tools needed to maintain and grow their export sales. You are expected to analyze business issues and determine which trade finance solutions may be required. You start exploring options as you are approached by sales teams for the businesses with their varying trade support needs.
To provide optimal solutions for export sales, you need to first identify the available trade finance options and determine which one will allow you to achieve optimal business results. You then must apply the appropriate tools to meet specific industry requirements. You also explore the role export credit agencies and development banks play in providing support for global trade, particularly in developing countries. In addition, you plan to evaluate all existing trade finance partners in light of the new regulatory environment and determine what, if any, changes need to be made.
As you work through the best way to achieve your company’s goals, you consider both the costs and risks associated with export sales. This is critical in determining which trade finance option is optimal. For instance, you can use factoring to release funds tied up in customer receivables, and you can also buy credit insurance to cover the payment risk of a strategic customer. For equipment exports to a project in Mexico, you look at an export credit agency for needed capital and work with a commercial bank on structuring prefinance for supplying heavy equipment to a base-metals mine in Australia. In doing all of this, you are able to both maintain and grow your company’s business.
How effective are your company’s trade finance solutions? Can you and your team provide better finance solutions to grow and build your company’s export sales? Accenture Academy’s course Using Trade Finance to Support Export Sales
takes you through the trade finance toolbox and offers real-world examples so you can provide optimal trade finance solutions to your company.