A few handy tips on pitching for big business and using your bank's trade finance services to help your company along.
As a business owner with company operations doing well in the domestic markets, you are now considering pitching for international business. But you are a little sceptical about doing so - after all, you know little about securing finance for overseas projects, or even the laws associated with the process.
However, a good bank has all the requisite trade finance products and services already in place. All your company needs to do is to present a business plan, copies of the company's balance sheets and tax returns, and also details of the deal you are about to formalise. The bank can handle the international trade finance processes on your company's behalf.
What is trade finance?
Trade finance is the underlying factor that makes it possible for two cross-border entities to have a business transaction with each other. For example, if you are an exporter that sells clothing outside the borders of your country, you will need to be paid for the products you sell while the importer at the other end of the transaction will require a guarantee on the product's quality and veracity of the deal. Trade finance creates the ideal opportunity where finance is provided to bridge the gap between the product's shipment from your market, to its arrival and delivery in the other market. The supply chain can be a complex one, but it is made easier by means of minimising the monetary risks if international trade finance channels are already in place for the same.
Your bank can set up a cost-effective and reliable trade finance channel for your business. It is done in the form of Letter of Credit (LOC), insurance or even guarantees. There can also be a facility of correspondent banking, where your bank sets up a payment account and corresponds with the receiving bank in the other market for the duration of the deal.
How to secure international trade finance for your project
Now that you have approximately understood how trade finance may help your company in securing the overseas business, it is time to approach your bank for the funding:
* Prepare a business plan outlining the transaction's salient points. Your bank will need to understand the monies and the modalities involved in the business deal that you are contemplating. Prepare a report on the same - consider it equivalent to a pitch you make for business funding. The report must list all the important points about the deal, your repayment plan for the borrowed funds, etc. Append your company's balance sheets, tax returns and account statements for at least two years with this report.
* Discuss the relevant trade finance options with your bank. Your bank will now assess the proposition and suggest the trade finance solution most suitable for it.
* Complete the paperwork and embark on the project. Fill out the paperwork as directed and let your bank set up the trade finance channel. You are now good to go!