New Guide Explains Basics of Trade Finance
A new publication from the International Trade Administration’s Office of Finance offers small businesses and new exporters a succinct guide to the basics of export financing.
by Matt Braud and Yuki Fujiyama
A comprehensive, informative, and easy-to-understand resource on export financing, Trade Finance Guide: A Quick Reference for U.S. Exporters , was published in early April 2007 by the Commerce Department’s International Trade Administration (ITA). Written by the ITA’s Office of Finance, the guide was specifically conceived to address the need of U.S. small and medium-sized enterprises (SMEs) for information on that occasionally daunting, but crucial, aspect of conducting international business.
SMEs make up the backbone of the U.S. economy. According to the Census Bureau, there were 5.8 million SMEs with employees in 2005. Those SMEs employed about half of the private-sector workforce in the United States. The Trade Finance Guide is designed to provide SMEs with the knowledge to grow and to successfully compete in overseas markets.
“The Trade Finance Guide is a first-of-its-kind finance resource for America’s small businesses,” said Franklin L. Lavin, under secretary of commerce for international trade. “By taking advantage of this cost-effective, easy-to-obtain tool, U.S. exporters can enhance their competitiveness in today’s global marketplace and easily learn how to turn overseas opportunities into actual sales and profits.”
Brevity, Visuals Aid Message
The Trade Finance Guide contains 11 two-page chapters, which offer concise descriptions of the most commonly used financing techniques in international trade. Topics include the following:
- Methods of payment
- Letters of credit
- Export working capital
- Export credit insurance
- Government-assisted foreign buyer financing
A chart accompanies each section and offers the user a brief, to-the-point statement of the pros and cons of each financing method, as well as the risks involved in using the method. With this easy-to-understand guide, SME exporters will learn how to effectively manage the risks associated with doing business internationally and to achieve the ultimate goal of getting paid for their export sales, especially on time.
Released at Export–Import Bank Conference
On April 12, 2007, the Trade Finance Guide was officially released by Ana Guevara, deputy assistant secretary for services, while she spoke at the Export–Import Bank’s annual conference in Washington, D.C. Guevara joined Bijan Kian, director of the Export–Import Bank, in a session titled “New Horizons in Exporting Services.” They led an interactive discussion on ways to increase exporting opportunities for U.S.-based services.
“The annual Export–Import Conference provided an excellent opportunity to distribute advance copies of the Trade Finance Guide,” said Guevara. “I was able to offer detailed explanations of how this guide can help participants remain competitive in today’s marketplace.”
FCIB, a non-profit association of executives in finance, credit, and international business that is based in Columbia, Maryland, helped create the Trade Finance Guide. FCIB is a prominent business educator of credit and risk management to exporting companies of every size.
Regular Updates to Come
The Commerce Department plans to update the guide on a regular basis. Future updates will be posted to the Department of Commerce’s Web site and made available in print, reflecting the feedback received from the Trade Information Center, U.S. Export Assistance Centers, and the Commercial Service’s overseas posts. All of those stakeholders plan to use the guide as a counseling tool to directly assist U.S. businesses in exporting their products and services to overseas markets.
Matt Braud is the communications director in the International Trade Administration’s Manufacturing and Services unit. Yuki Fujiyama is a business and industry specialist in the International Trade Administration’s Office of Finance.
How to Obtain Copies
The Trade Finance Guide is available online at www.export.gov, the U.S. government’s export portal. Printed copies will be available from the Trade Information Center at (800) USA-TRAD(E) (800-872-8723) and from the Commercial Service’s global network of domestic Export Assistance Centers and overseas posts. To find the nearest Export Assistance Center or overseas Commercial Service office, visit www.export.gov or call the Trade Information Center.