Receiving and depositing a check from
a customer across town is a simple
process. However, as a firm grows and its business moves offshore, banking becomes more complicated.
“Any good local bank can provide any
service that a New York bank can provide,”
says Christina Moinette, head of international services for FirstMerit Bank. “We
provide personalized, one-on-one service.
We service the small customer as well as
the large customer. We have the ability to
facilitate any need the customer may
have.”
Smart Business asked Moinette what
kinds of international services a business
owner should expect a local bank to provide to his or her business.
What are the typical services an international banker provides?
A bank’s international services department will provide the following products:
letters of credit, including those for standby, export and import; escrow; international collections, both bank-to-bank incoming
and bank-to-bank outgoing; international
check collections and encashment; international bank notes, both buying and selling; international wire transfers, both
incoming and outgoing; as well as forward
contracts. All of this is in addition to the
usual currency exchange services.
How do letters of credit work?
When you purchase goods overseas, the
seller may request that you provide a commercial letter of credit. The letter of credit
provides the seller with assurance that payment will be made against compliance with
terms of the letter of credit. The issuing
bank substitutes its creditworthiness for
that of the buyer.
We issue the letter of credit to an advising
bank in the seller’s country. The advising
bank then forwards the letter of credit to
the seller. The seller determines his compliance with the letter of credit, ships the
goods, prepares proper documentation
and then presents them to the advising
bank. The advising bank then forwards documentation to your bank. If documents
comply with the terms of the letter of credit, payment is made to the seller immediately (sight draft) or at a future date (time
draft). One of the big benefits of a letter of
credit is that your bank substitutes its credit for that of the buyer. Letters of credit are
readily accepted by overseas sellers and
they assure payment to the seller.
How about letters of credit received here in
the States?
Many banks can advise or confirm a letter of credit being received by you. After
you prepare your documentation and present it to the bank, it will verify your documents against the terms of the letter of
credit and forward them to the issuing
bank for payment. Your account is usually
credited when payment is received.
How does EFT (electronic funds transfer)
work?
A bank provides international funds
transfer services for expediting overseas
payment requirements. Funds may be
transferred by draft or electronically
(EFT). Drafts are drawn on foreign banks
in U.S. dollars or a variety of foreign currencies. Wire transfers may also be made in
U.S. dollars or a variety of foreign currencies to foreign banks in favor of parties
abroad. Payments are made in a variety of
foreign currencies.
This may provide you advantages when
purchasing items overseas in the seller’s
currency. The ability to issue traveler’s
checks and banknotes in foreign currencies is also a benefit, as is the option to
order and accept delivery of necessary foreign currency.
Should I expect my banker to provide language skills, as well?
Most good international banking operations can provide an interpreter or have
documents translated for the customer if
required. However, it is standard that most
contracts involving U.S. companies, both
originating in the United States and those
originating abroad, be written in English.
Couldn’t a big bank in New York do a better
job with international work?
Any good local bank can provide any
service that a New York bank can provide.
Plus, with a local bank you can get personalized, one-on-one service.
In addition, some local banks with international services usually offer an automated letter of credit and international collection system that customers can access via
the Web. Those are real conveniences for
the executive who travels a great deal.
If I do a lot of business, say in England or
France, should I have a banker in London or
Paris, too?
Maybe in years past that was a consideration. However, it is not necessary in
today’s environment. Local banks have
accounts available in various currencies to
meet the needs of the customer globally.
CHRISTINA MOINETTE is head of international services for
FirstMerit Bank. Located in Akron, she brings more than 20
years of international banking experience to customers
throughout Northeast Ohio. Reach her at (330) 384-7178 or
[email protected].
