Commercial Insights

How U.S. exporters can mitigate risk and strengthen global growth

Trade finance solutions can help exporters grow their business and reduce risk.

With two-thirds of the world’s purchasing power located outside of the United States, American businesses continue to export their goods and services overseas. For many, the benefits are clear: Expanding into foreign markets helps manufacturers, distributors and service providers both increase and diversify their revenue base. Plus, firms that export their goods typically create more jobs and pay higher wages compared to non-exporting firms, according to the International Trade Administration.

Of course, there are potential challenges to consider – particularly with ever-evolving geo-political dynamics. Payment risk management, currency risk management and working capital availability are all common concerns, according to Carson Strickland, Global Trade Finance sales executive at Regions Bank. But where there are challenges, there are also solutions.

How can exporters mitigate financial risk?

“Exporters can find confidence in knowing they don’t have to manage challenges on their own. Trusted banking advisors can offer guidance through experience and insights into the industry,” Strickland said.

Working with the Export-Import Bank of the United States (EXIM), an independent federal agency and one of the largest international banking networks in the world, Regions Bank offers a suite of products and services to help businesses of all sizes mitigate financial risk while expanding their business.

“For companies that may be considering exporting, utilizing some of the tools and solutions we provide can help them mitigate the risks associated with transacting with foreign buyers, particularly those they haven’t dealt with before,” said Bryan W. Ford, Head of Corporate Sales and Treasury Management at Regions Bank.

Strickland points out that a key challenge for companies selling internationally is the often-elongated cash cycle.

“While transactions done domestically might turn in 30 to 60 days, the same sale internationally might take 90 to 180 days to come to fruition due to the differences in the financial systems and transportation issues,” he said.

For example, rather than selling on open terms, businesses can sell products utilizing an Export Letter of Credit. This not only helps exporters mitigate country and commercial risk concerns, but also allows them to receive immediate payment for goods, ensuring they’re not reliant on a foreign buyer to make payment. This, in turn, also makes it possible for exporters to offer overseas buyers more attractive credit terms.

“With an Export Letter of Credit, a bank guarantees payment for each transaction as long as the outlined terms are met,” Strickland explained.

How can businesses manage working capital and export-related risk?

For companies that may require additional working capital to grow their business internationally, there are several loan solutions available through Regions Bank. EXIM Working Capital Loan Guarantee and the SBA Export Working Capital Program (EWCP) are two popular options designed to help businesses pay for any materials, equipment and labor support necessary to fulfill export orders and increase their global competitiveness.

Trade Credit Insurance can also help support the working capital needs of exporters by enabling them to insure foreign accounts receivable. This insurance provides an extra layer of security for exporters, while also enabling them to provide prospective buyers with more attractive account credit terms without taking on additional risk.

“We are focused on helping our clients be the best they can be in an increasingly global economy,” says Ford, noting that Global Trade Finance is an area Regions has been committed to for over 100 years. “We believe we are able to provide exemplary service to our clients, while giving them access to tools and solutions that will enable them to grow their business.”

Ready to help

As a Level 6 Delegated Authority and Fast Track Lender, an EXIM Lender of the Year Award and Deal of the Year recipient, and the number one export working capital lender in the country, Regions’ Global Trade Finance team is here to help you grow your business worldwide. Connect with us.