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Export Presentaton March2012

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Opportunities for Successful Exporting

Text of Export Presentaton March2012

  • 1. Opportunities forSuccessful ExportingPresented by:Scott SmithhislerGlobal Trade Consultant

2. Agenda: Successful export growth is Welcome & Introductions more about plans, people, International Sales The Opportunity process & tools, and less about chance Export Strategy Customer Relationships People, Process & Tools Policies & Procedures Trade Risks Payment Terms Options Benets of Strategic Partners Q&A 3. Opportunity Today: 70% of the worlds purchasing power islocated outside of the U.S. 95% of customers are outside the U.S. Less that 1% of American companiesexport typically to only one countryTomorrow:Nearly 87% of economic growth over the next ve years will take place outside of the U.S. Source: National Export Initiative, International Monetary Fund, US Department of Commerce 4. Benets of Going Global Diversify business & expand market share Increase customer base Increase top line sales and bottomline prots Reduce xed costs Optimize production capacity Reduce seasonal market uctuations 5. Exports as Part of Growth StrategyProduct & Market Assessment: Leverage success in the US to support export opportunities Assess demand for product or service Competition Pricing & market trends Product or packing modication Regulatory & legal requirements Country riskInternal Assessment: Impact on our business Export plan serves as roadmap & gauge to measure success 6. Sales Channel Distributor: Has exclusive rights to sell your product in one or more countries Export Trading Company (ETC): Deal with multiple manufacturers; handle all aspects of sales & marketing in a given territory Licensee: Has the right to use your trademark and manufacture products under certain restrictions Retailer: Buys directly from you and sells to consumers Afliate: An operation fully owned by your company 7. Distributor Selection Selecting the right partner is crucial to long term business success Strong relationship with distributor is key Does your product t into their long term strategy? How much of your product can they sell? Agreement structure Exclusive vs. non-exclusive Territory Pricing & terms Sales expectations Contingency plan 8. The Team Maintaining a highly skilled, passionate cross functional team working together to ensure overall success is fundamental for international growth.Working environment with opencommunication & sharedaccountabilityHire people with internationalbusiness, logistics or tradenance experienceInvest in ongoing training acrossyour organization3rd party Partners are part of theteam (i.e. banks, forwarders,specialty providers) 9. High Level Export Process & Team1. Customer Relationship Sales / Legal Customer selection Legal agreement2. Pricing Credit terms according toSales / Financerisks & policy Product offering 3. Order Fulllment Prices consider INCO terms Intl Customer Service / Credit Quote to Customers Customer purchase order Collaboration & changes Credit check Proforma Invoice (includes 4. Credit Checkrequired LC specics) Credit L/C Review Credit decision5. Shipping Release product for shipment Customer Service / Logistics Shipment Planning Shipment 6. Payment & Delivery Transport & other documents Credit / Finance / Customer Draw on LC & monitor Documents to Customer Payment to seller Customs clearance at destination Happiness! Lets do more of this! 10. Standard Operating ProceduresClear procedures for the cross functional team supporting exports.Main Elements: Approval by Sr. Leadership in Sales, Finance & Operations End-to-end process steps and supporting job functions Delineation of roles and responsibilities Metrics and reporting Guidelines for on-going training 11. International Trade Risks Inform the approach Commercial Buyer history Credit reporting limited Financial standards may differ Potential for loss during transit Geopolitical Government stability and consistency Economic Foreign exchange rate uctuations Foreign Bank solvency Sovereign risk Legal Contract enforceability Goods recoverable Customs & Tax regulations change 12. Export Credit PolicyCompeting in international markets requires companies to take SMART RISKS.Main Elements: Approval by Sr. Leadership in Finance, Sales & Operations Customer credit application & approval Credit limits and terms to be assigned against criteria Customer credit strength Customer history & performance Geopolitical risk rating Order value Override approvers & limits 13. Terms Options - Balancing Risk, Cost & TimingOPEN ACCOUNT DOCUMENTARYCOLLECTIONLETTER OF CREDIT CASH IN ADVANCE 14. Letters of Credit ExplainedBuyers Bank substitutes its credit Letters of credit work through aworthiness for that of the buyerseries of formal agreementsGuarantee is contingent on strict Contract Purchase Ordercompliance with terms & conditionsSeller Conrmation BuyerTypically goods cannot beobtained by buyer until payment ismadeCredit risk is with buyers bankand country of domicile LC Application FX & Export Financing Loan / Collateral LC Advice / Conrmation Documents & PaymentWorks well for higher risk Documents & Payment FX & Trade FinancingtransactionsSellers Bank Correspondents Credit Line for Buyers Bankconrmations 15. Outsource ProvidersExternal providers act as an extension of your operation and help optimize results.Freight Forwarders: Specialty Providers: Serve as travel agents for Minimize risk by providing international goods expertise & software Key partner on product ow, Reduce costs by accelerating problem solving, and cost payments & increasing document containment accuracy Need to ensure services t your needs and compare pricesOther Resources for Exporters: US Export Assistance Center Business Oregon Small Business Administration 16. Questions?Thank you for coming today!Scott SmithhislerGlobal Trade ConsultantOrinoco International [email protected]/in/scottsmithhisler+503-816-3647 17. AppendixMore on Payment Terms OptionsINCO Terms & ExamplesKey Procedural Points 18. Cash in Advance, Open Account & Documentary Collections Cash In Advance & Open AccountDocumentary Collections One party has all the leverage Buyers Bank holds documents required for Customs clearance until Mitigate risk using a combination ofpayment is made steps and/or timing Credit risk related to buyer Buyer decides whether to pay Works best with trusted customers and when geopolitical risk is low 19. Letter of Credit Process Flow Freight Forwarder Applicant / Buyer 6 ShipmentGoods 7 Transport DocsSTART HERE 1 & 2 Seller / Beneciary Purchase Order & Confirmation 123 L/CDocumentsApplication to Buyer 95L/C ClaimReimbursing Bank10Payment 11 Export Documents 8 LC &Letter of CreditDocumentsIssuing Bank 4 Advising Bank 20. Letter of Credit Additional Pros & Cons ProsCons Eliminates buyer credit risk and Order fulllment systems may not ensures prompt paymentsupport LC or trade documentation requirements, so automation may be High degree of Exporter control limited Conrmations eliminate bank/ Heavy reliance on carriers, country riskforwarders and other 3rd parties for LC compliance Rules are well dened and predictable (e.g. subject to UCP600) Complexity of LCs and related rules require high degree of expertise Usance (term) LCs offer cost effective trade nancing option; could be Visibility limited and monitoring is competitive advantage time consuming Irrevocable means terms and conditions can only change if buyer, seller and bank agree. 21. International Commercial (INCO) TermsINCO terms: Examples: Dene Buyer & Sellers liabilities & responsibilities Any Mode of Transport Indicate a named place EXW, Named Place of Delivery(EXW = Ex Works) Depict what the selling price Seller is responsible for warehouse includesservices and export packing Are specic to either sea/ Buyer arranges for loading at point of inland waterway transport origin through delivery to nal destination or other modesOcean TransportCIF, Port of DestinationCIF = Cost, Insurance & Freight Seller is responsible for transport to destination port and insurance Buyer arranges for pick up at local dock, arranges clearance and pays duty 22. Key SOP Topics Title Passage & Consignment of GoodsCertain elements of the SOP are tied 1. How legal title passes from seller toto managing export risks & productbuyerow.Physical movement of goodsTransport documents (e.g. cargoAs such, they should be consideredreceipt, waybill, bill of lading)in the export policies & procedures. 2. Transport Documents Bill of Lading (B/L) = Negotiable Title Cargo Receipts, Truck Bills & Waybills = Non-Negotiable Receipts 3. Consignment of the Goods Open Consignment = To Order Title passes via endorsement Straight Consignment = ToNo endorsement required; can helpexpedite delivery 23. MonitoringVisibility to key process steps can enable the team to address problems andcontinuously improve the process.Process:Tools: Document end-to-end process & timing Automate wherever possible Make adjustments based on experienceutilizing third party websites Maintain & monitor credit limits and terms systematically Systematic tracking Order receipt & conrmation Accounts receivable Letter of credit monitoring Balances Expiration dates Payment status