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8/13/2019 Marsha Sompayrac SunTrust Helps Exporters - How to Get Paid
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Copyright 2005 SunTrust Banks, Inc.
Global Trade Solutions
International Payment & Finance Methods
Marsha Sompayrac
SunTrust Bank
September 21, 2011Norfolk, Virginia
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Agenda
Products and Services for Importers/Exporters
Risk ComparisonInternational Methods ofPayment
Collections
Letter of CreditTrade Financing
SBA
EXIM BankExport Credit Insured Accounts Receivable
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International Banking and Risk Mitigation
Commercial
- Any event that prevents the buyer from paying or prevents the seller from delivering theproduct or service.
- Problems with payment arrangements on behalf of the exporter and/or importer
- Problems with the merchandise on behalf of the exporter and/or importer
- Additional costs for financing, insurance, and shipping
- Protracted default- Bankruptcy or insolvency by the buyer
Political
- Any event or unforeseen factor not necessarily within control of the buyer and/or exporter
- Problems with currency exchange
- Government or political intervention
- Problems with the movement of merchandise
- Natural Disasters
A variety of financing options are available when negotiating payment terms
RISKS
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International Trade Products
Products and Services
Trade Services Commercial Letters of
Credit - Import & Export
Standby Letters of Credit
Documentary Collections
Export Credit Insurance International
Correspondent Banking
Trade Finance Working Capital Loans
for exports
Foreign ReceivableFinancing
Foreign Buyer Financing Overseas Investment
Financing
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Risk Comparison
INTERNATIONALMETHODS OF PAYMENT
Exporter Risk
High
Importer Risk
Low
Trade Terms
Open Account
Documentary Collection(Time)
Documentary Collection (Sight)
Letters of Credit (Time)
Letters of Credit (Sight)
Cash in Advance
INTERNATIONAL
METHODS OF PAYMENT
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Copyright 2005 SunTrust Banks, Inc.
International Methods of Payment
Getting Paid and Managing Risk
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International Methods of Payment
Time of Payment: prior to shipment.
Buyer Pays
Wire Transfer
Check
Draft
Credit Card
Goods available to Buyer: upon delivery
Risk to Seller: no risks
Risks to Buyer: loses use of funds until goods arrive. Sellermay not ship goods as ordered or at all.
No Credit Approval Required
Cash In Advance
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International Methods of Payment
Time of Payment: upon payment of invoice.
Goods available to Buyer: upon delivery.
Risk to Seller: completely relies on Buyer to payinvoice when due.
Risks to Buyer: no risks.
Recommended for sales to long-standing customerswith satisfactory payment history
Open Account
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International Methods of Payment
Time of Payment: SIGHT at time of presentation ofthe draft
Time of Payment: TIME at a future date. Goods available to Buyer: after payment if ALL Ocean
Bills of Lading are included with the documents andafter the cargo has arrived.
Risk to Seller: possible non-payment of the draft.
Risk to Buyer: has assurance of shipment, but Sellermay not ship goods as ordered. Must pay to get title togoods.
Not recommended for sales on extended terms
Documentary Collections
Draft or DocumentsAgainst Payment Or Acceptance
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International Methods of Payment
Documentary Collections
Benefits
More secure than Open Account
Goods available to Buyer: after payment if ALL Ocean
Bills of Lading are included with the documents andafter the cargo has arrived.
Risk to Seller: possible non-payment of the draft.
Risk to Buyer: has assurance of shipment, but Sellermay not ship goods as ordered. Must pay to get title togoods.
Dont encumber Buyers line of credit
Inexpensive
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International Methods of Payment
A payment instrument issued by a bank on behalf of its customer.
The issuing bank substitutes its own credit standing for that of itscustomer.
The issuing bank undertakes to pay for the goods or services provided by
the beneficiary of the LC; the beneficiary looks to the bank for payment,instead of the buyer (applicant of the LC).
The LC assures the beneficiary (exporter) of payment when the terms ofthe credit are met.
The exporter is not obligated to perform if the terms of the LC are notacceptable.
Commercial letter of credit can be paid at sight or at period in future
Time Letter of Credit can be discounted if seller doesnt want to wait until
LC maturity. Simple form of trade finance.
What is a Letter of Credit?
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Letters of CreditBenefits
More secure than Open Account
Foreign Bank promises to pay exporter if documentsare in compliance with letter of credit
Goods available to Buyer: after payment if all OceanBills of Lading are included with the documents andafter the cargo has arrived.
Risk to Seller: LC void if seller docs are not incompliance, i.e. have discrepancies
Risk to Buyer: has assurance of shipment, but Seller
may not ship goods as ordered. Must pay to get title togoods.
Versatilecan build in terms for buyer and still haveassurance of payment from overseas bank
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International Methods of Payment
Letter of Credit
Importer Exporter
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International Methods of Payment
Letter of CreditImporter Exporter
Advising Bank
Documents
Issuing Bank
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International Trade Finance
TRADE FINANCE TOOLS These traditional payment methods are fine, but what if your customer
wants extended terms of payment or your competitors are offering
better terms?
Trade Finance may be the solution to your customers needs and theway to make exports a manageable part of your growth strategy.
SBA Export Express
SBA Export Working Capital Program
EXIM Bank Working Capital Program
Insured Foreign Receivables Financing
Both SBA and EXIM assists US exporters to obtain loans to producegoods or services for export. They guarantee repayment to the lender,making it possible for banks to extend financing to the exporter. Theydo not compete with commercial lenders, but assumes the risks theycannot accept.
SunTrust Bank is a delegated lender for both SBA and EXIM BankPrograms
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International Trade Finance
SBAs Export Express Working Capital
Guarantee Program
The program supports single transactions or multiple salesunder a revolving line
Maximum loan amount limited to $500,000
Guarantees 90 percent of a commercial bank loan up to$350,000 and 75 percent from $350,000-$500,000
Program minimizes government mandated forms. Streamlinesprocessing and costs of smaller SBA loans for exporters
VERSATILE -- Can be used for working capital, issue standbyletters of credit for advance payment guarantees, participationin foreign trade shows, or translation of product literature foruse in foreign markets
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International Trade Finance
SBAs Export Working Capital GuaranteeProgram
The program supports single transactions or multiple salesunder a revolving line
Guarantees 90 percent of a commercial bank loan up to$5,000,000
Letter of credit or open account purchase orders withacceptable insurance or exceptionally strong buyer
Can be used to purchase goods and services or pay for labor& materials to put together an export order
At the minimum, loan must be collateralized by export- relatedAR and inventory
No US content requirement or military sales restrictions
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International Trade Finance
FEES and RATES
Guarantee Fee:
Maturities of 12 months or less = 1/4 percent
Maturities greater than 12 months = 2-3% depending on loan size
Interest Rates/Lender Fees are Negotiable
ELIGIBILITY
A business must meet SBAs industry size standards and have been
in business for at least 12 continuous months
SunTrust Bank is a delegated lender for SBAs Export Working Capital
Guarantee Program
One of few banks in country to be awarded this designation
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International Trade Finance
Export Import Bank of the US Export WorkingCapital Guarantee Program
The program covers 90% of the loans principal and accrued interest
STB minimum loan request is negotiablethere is no maximum amount
At the minimum, loan must be collateralized by export-related AR and inventory
Goods must have at least 50% US cost content to guarantee the entiretransaction
Loans Can Be either Transaction Specific or Revolving
High Advance Rates on Inventory and Receivables, including work in Process
. Some restrictions to the program (military exports and some countries are
excluded)
Financing Provided for Short, Medium, and Long Term
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International Trade Finance
Export Credit Insurance & Insured Foreign ReceivablesFinancing
Insurance Available through EXIM Bank and Private Sector Insurers
Enables US exporters to extend open account terms to international buyers
Insured export receivables looked upon favorably by banks. Exporters may be
able to borrow against insured foreign A/R.
Insurance policies that protect US exporters against foreign buyer default
Commercial risk insurance (buyer bankruptcy and insolvency)
Political risk (war, inconvertibility of currency)
Short Term and Medium Term Insurance Policies
Multi Buyer or Single Buyer Policies
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Copyright 2005 SunTrust Banks, Inc.
Contact:
Marsha SompayracDirector, Global Trade Solutions919 E. Main Street, 2nd FloorSunTrust BankRichmond, VA 30303Tel: 804-782-5558Marsha.Sompayrac @ Suntrust.com
Hai-nah EllisonVice President, Global Trade Solutions919 E. Main Street, 2nd FloorSunTrust BankRichmond, VA
Tel: 804-782-7476Hai-nah.Ellison@ Suntrust.com
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