In today’s complex global business environment, companies with overseas operations or trading partners often need to form relationships with local banks overseas. By taking advantage of services like international accounts, international risk management, financing, payment and collection services, and transaction and account information reporting, you’ll be able to better compete globally. You’ll also be able to take advantage of international services for travel and personal banking needs.
“All companies, both large and small, can take advantage of international banking services,” says Alice Chen, a vice president and commercial banker with the Wells Fargo Business Banking Group. “With effective cross-border banking solutions, you’ll get the benefit of one-stop banking for both your international and domestic accounts.”
Smart Business spoke with Chen about utilizing these banking services to expand your business globally.
What are some typical international banking product offerings?
Typical financing products help customers receive the credit they need to achieve their global business goals. If you require export financing or are looking to open an office or subsidiary overseas, government-guaranteed loans, cross-border lending programs and foreign accounts receivable purchasing can help finance international growth.
Some typical financing products include:
- Trade cycle financing Fund each stage of a trade transaction, instead of outlaying the total base amount. Get advances on import shipments of up to 100 percent of purchase price.
- Letters of credit (LCs) Improve cash flow in the U.S. or Asia by using import, export, standby or prepaid LCs.
- Documentary collections Expedite processing and reduce sales and transfer costs of funds and goods.
- Short-term financing Increase the credit available for short-term financing in your asset-based credit line by including uninsured foreign accounts receivable in your borrowing base. The ability to include these receivables in your borrowing base is extremely valuable and is designed for experienced exporters with well-established buyers in Europe, Canada and Japan.
- Medium-term financing If you are a U.S. exporter, you can offer overseas customers attractive credit terms and significantly reduce non-payment risks. This export financing covers most non-project-related credit extensions for capital equipment exports.
- Ex-Im Bank Working Capital Guarantee Program Accelerate overseas sales payments for your export business. Get financing on your foreign accounts receivable or inventory, including work in progress. This pre-export working capital financing is 90 percent guaranteed by the Export-Import Bank of the United States.
- Export-risk mitigation Structure trade transactions to maximize cash flow and minimize foreign risks associated with exporting. With the sale of short- and medium-term trade receivables to the bank, in many cases, without recourse to you, you can enhance your competitive position.
Are all international accounts the same?
Not all are created equal. Multi-currency accounts eliminate foreign exchange conversion and simplify transactions, while offshore foreign currency time deposits gain potentially higher interest rates and flexible maturities, and are also a useful portfolio diversification tool.
You can also get accounts specific to the countries you’re doing business in. For example, Asia account services give you a wide range of financial and trade services in Hong Kong and Taipei, including international cash management, financing and commercial investment banking services. Canadian dollar checking reduces international payment and currency conversion costs, while centralizing cash management.
How do payments and collections work with international banking?
In most places your company does business outside the U.S., you can use the bank’s payment and collections products to speed the movement of funds, reduce the cost of moving funds, increase cash flow control, and integrate domestic and international treasury management products. These services include:
- Wire transfer service ?Expedite wire payments to and from more than 76 countries.
- Foreign currency drafts Get secure bank checks payable in multiple foreign currencies.
- Foreign exchange services online? Get real-time, comprehensive foreign exchange services, 24 hours a day.
- International ACH? Facilitate bulk payments, increase control over your cash flow and reduce costs of moving funds.
- U.S. dollar or multi-currency accounts Simplify foreign currency transactions, receivable deposits and funding to meet payment requirements.
- Letters of credit (LCs)? Get import, export, standby or prepaid LCs and speed up the issuance of your LCs in the U.S. and in Asia and the payments you receive on sight and deferred payment LCs in your favor. Manage your LCs online.
- Foreign cash letters? Get a cost-effective solution for clearing checks either in foreign currencies or drawn on foreign banks.
- Documentary collections Expedite processing and lower the sale and transfer costs of goods and funds worldwide. Create direct collection instructions and drafts online, request document amendments online and accelerate the delivery of shipping documents.
For faster payments, go online to get real-time MIS transaction reporting data, document imaging software and information reporting. Also, a Canadian wholesale lockbox can help you accelerate your Canadian collections and convert payments into cash in the shortest time, cutting mail and processing float by several days and enhancing your company’s cash and investment positions.
Alice Chen is a vice president and commercial banker with the Wells Fargo Business Banking Group. Reach her at (713) 319-1727 or Ying.Chen@wellsfargo.com.