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Aug. 16 - Special Report: SunTrust: U.S. Companies See International Trade as a Growth Opportunity

Category: Banking & Finance

Savannah Business Journal Special Report

August 16, 2015 - According to a SunTrust Banks, Inc. (NYSE: STI) survey recently released, more than 17 percent of businesses plan to enter or expand into new international markets within the next five years. For many small and mid-market companies, global trade could lead to increased profits and sustained growth, according to the banking company.

The U.S. Department of Commerce found that the U.S. had a record level of goods and services exports in 2014 – the fifth year in a row. To help companies take advantage of the burgeoning international marketplace, SunTrust offers five strategies to navigate global trade and mitigate the risks involved.

“Falling trade barriers and the ability to leverage technology– especially the Internet – have made it easier for small and mid-market companies to engage in international trade,” said Susanne Keough, head of the Global Trade Solutions at SunTrust Bank. “But it’s still a complex process. Successful businesses know there are numerous risks when entering the global market and they should take the time to fully understand the resources and tools available to help protect profits and ensure a smooth expansion.”

Whether importing or exporting, to manage the risk of international trade SunTrust suggests:

1.    Research Global Markets. Developing a strategy to start or expand global initiatives begins with a macro understanding of the marketplace including the cultural, political and business environment. Next, companies should assess their product’s fit in the global market, analyze local economic conditions and determine what resources will be available to ensure access

2.    Understand Currency Fluctuations. Buying or selling in different currencies exposes a business to exchange rate risks that can impact the top and bottom line over the life of a contract. Working with a bank that offers currency risk management services provides U.S. companies selling or buying in a foreign currency the tools to manage this risk. This allows a business to protect their margins, and remove uncertainty of the U.S. dollar’s value for future foreign receivables or payables.

3.    Establish Secure Payment Solutions. Understanding the pros and cons of various payment options is critical. For instance, using a documentary collection process or letter of credit provides more protection than open account terms and exposes a company to less risk than waiting to receive payment from an international buyer directly.

4.    Consider Export Finance. To begin an international export business, companies will need to have the inventory and financing to make it happen. They will want to consider a range of trade finance solutions, including pre- and post-export financing to provide funding for procurement, inventory, receivables or production of orders, as well as insured foreign receivables and buyer financing. Exporters are often asked to provide the financing to help close a sale. This is particularly true in emerging markets, where interest rates are higher and bank financing is limited.

5.    Tap Expert and Third Party Resources. The key to overall success is to assemble a team of experts including attorneys, financial partners, freight forwarders, customs brokers and export credit insurance specialists. By integrating these experts into a business’ operations, they can help simplify the complexity of doing business in the global marketplace. Experienced partners will help jumpstart global initiatives by providing intelligence on markets, customers, suppliers, and costs. Businesses should also take advantage of other resources, such as national, state and local programs.

“Invest the time to learn all you can about global trade and align your business with specialists who can help you move quickly to take advantage of opportunities,” states Keough. “At SunTrust, we have deep expertise working with companies to expand international trade – both importing and exporting. We help clients evaluate the risks and offer solutions to avoid the pitfalls while growing their international business.”

There is more information on global trade at SunTrust’s Resource Center at suntrust.com/ResourceCenter.

The site provides a full range of educational content including articles, videos, podcasts and more.

 

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