It covers payment methods and information on, banking systems, foreign exchange controls, and U.S. and correspondent banking.
U.S. exports to Denmark are usually financed by the importer or the importer’s bank. EXIM bank financing is available but rarely, if ever, used. The most common method of payment for an importer in the early phases of a business relationship is by Irrevocable Letter of Credit opened through a commercial bank. This is a recognized procedure, well-known, and acceptable to Danish banks and importers. When a business relationship has reached a stage of mutual trust, payment credits are often extended by the exporter for periods varying from 30-90 days. In some cases, payment by credit card may prove to be the simplest and most effective means of payment. There are no local credit facilities available specifically to finance imports from the United States or from any other country.
The vast majority of small and medium-sized Danish firms are financed by commercial bank lines of credit. The credit line is typically extended on a continuous, revolving basis and is not subject to an annual settlement. Such credit lines are usually established to finance day-to-day operations, including inventory financing. Larger corporations may obtain capital through stock offerings on the Copenhagen Stock Exchange. Some larger Danish companies may also make use of U.S. stock exchanges. Institutional investors, such as pension funds, also play a major role in financing Danish companies, and such investments are usually carried out following individual negotiations. Financing is often a problem for small and medium-sized companies with high growth or growth potential. Frequently, such companies choose to or are forced to solve their financing problems by selling out to foreign, including U.S., corporations. During the last decade, the concept of venture capital has also grown in Denmark, and that can now be described as an established method of financing. However, venture capital funding applies primarily to IT and biotechnology companies.
All major Danish banks have correspondent bank relationships in the United States. Most of them have such relationships with more than one U.S. bank.
EU financial assistance programs provide a wide array of grants, loans, loan guarantees, and co-financing for feasibility studies and projects in several key sectors (e.g., environmental, transportation, energy, telecommunications, tourism, public health). A number of centralized financing programs are also generating procurement and other opportunities directly with EU institutions.
The EU supports economic development projects within its Member States, as well as EU-wide “economic integration” projects that cross both internal and external EU borders. In addition, the EU aids candidate and neighbor countries.
The EU provides project financing through grants from the EU budget and loans from the European Investment Bank. Grants from the EU Structural and Investment Funds program are distributed through the Member States’ national and regional authorities. Projects in non-EU countries are managed through the Directorate-Generals Enlargement, Development and Cooperation (EuropeAid), and Humanitarian Aid and Civil Protection (ECHO).
For more information about the methods of payment or other trade finance options, please read the Trade Finance Guide available at https://www.trade.gov/trade-finance-guide-quick-reference-us-exporters. To access Denmark’s CS section on financing, visit the U.S. Department of State Investment Climate Statement website.